Advertisement
Australia markets open in 9 hours 25 minutes
  • ALL ORDS

    8,474.30
    +4.40 (+0.05%)
     
  • AUD/USD

    0.6844
    -0.0042 (-0.62%)
     
  • ASX 200

    8,205.20
    +7.00 (+0.09%)
     
  • OIL

    72.98
    +2.88 (+4.11%)
     
  • GOLD

    2,668.90
    -0.80 (-0.03%)
     
  • Bitcoin AUD

    88,068.09
    -1,529.42 (-1.71%)
     
  • XRP AUD

    0.76
    -0.09 (-10.60%)
     

Start smashing avos: Australia has an avocado oversupply

avocados
Avocados are in oversupply. (Source: Getty)

Australia will need to both consume and export more avocados as the nation’s growers navigate a period of soaring production growth over the coming five years, according to findings from Rabobank.

A report from the specialist agribusiness bank stated: “This year alone, ‘per capita supply’ of avocados is estimated to be up 26 per cent on the previous 12 months to 4.8 kilograms – equating to 22 avocados for every Australian.”

Rabobank’s report, titled The ‘Avolanche’ of Australian Avocados said a significant maturing of avocado trees in the past season – primarily in Western Australia and Queensland – resulted in a bumper crop, causing the national oversupply and seeing retail prices fall to a record low of $1 each in June last year and again early this month.

Retail prices for 2022 remained tracking at 47 per cent below the five-year average.

While the low prices were welcome news for consumers currently facing significant price rises for many other food items and household staples, they put considerable pressure on grower margins, already squeezed by increasing input costs and labour shortages, RaboResearch associate analyst and report author Pia Piggott said.

Regaining balance in Australia’s avocado market required both, “increased domestic demand and larger export volumes”, Piggott said.

Australian export volumes of avocados increased by more than 350 per cent in the past year, the report said.

“The Singapore and Hong Kong markets have been standout performers, with Australia growing to account for 46 per cent and 12 per cent market share of their avocado imports, respectively,” Piggott said.

“Malaysia remains an integral export market and has rebounded from COVID-related impacts, with Australian exports making up 46 per cent of the total imported avocados into Malaysia.

"Exports to the rest of the world are also up, including to the Middle East and Japan.”

The rise of avocado consumption in Asia – as a growing middle class embraced the health aspects of the fruit – presented an ongoing opportunity for exporters worldwide, the report said.

Competition is on the rise from other exporters though, such as Mexico - where the avocado industry is so lucrative it’s attracted the influence of crime cartels - and South America.

There were also other challenges, according to the report, including significant trade barriers, with Australia currently having either limited or no access to three of the largest avocado-importing markets in Asia – Japan, China and South Korea.

“While exporting provides the greatest opportunity for Australia’s avocado industry to attract a good price and improve revenue, ensuring high export quality is paramount to maintaining the reputation and premium of the fruit," Piggott said.

"Continued investment in improving export access remains a key priority for the Australian avocado industry."

Export help

From August, Australian exporters of perishable produce will have access to real-time information on supply chains and logistics under the new Export Supply Chain Service established by the Australian Government.

Minister for Trade and Tourism Don Farrell recently announced the advisory service - created to help exporters navigate ‘new-look' supply chains and a changed international trade environment.

“One of the biggest ongoing challenges for exporters is getting their produce to international customers,” Farrell said.

“This new supply chain service kicking into gear from August 1, 2022 will give Australian exporters the real-time information and insights they need to navigate complex global supply chains.”

It is being delivered by the Australian Trade and Investment Commission (Austrade).

The Export Supply Chain Service will provide ongoing assistance to small-to-medium enterprises as the International Freight Assistance Mechanism (IFAM) winds down.

IFAM was a temporary, targeted emergency measure, that maintained essential airfreight supply lines impacted by COVID-19 disruptions throughout the height of the global pandemic, the Government said.

Sea freight trial

Since September last year, Australian avocado producers exported via sea freight for the first time ahead of the bumper season, with national production forecast to increase by 60 per cent.

Exporters in Western Australia and Queensland were trialling shipping refrigerated containers of avocados to South-East Asia and Japan, using controlled-atmosphere technology to ensure the fruit arrived in pristine condition after a journey of 20-30 days, Austrade said.

The trials would “open the door for many first-time growers to reach international consumers and avoid crowding the Australian market,” the government agency said.

“The sea-freighting trials are a huge boost for the Australian avocado industry,” Flora Zhang, export development manager for Avocados Australia, said.

“Traditionally, more than 95 per cent of the avocados grown in Australia are consumed in Australia, but export is an important and developing sector for the industry.

“New orchards being established means production will continue to rise over the next five years, further increasing the pressure on the domestic market, so exporting is essential.”

Sealed cold docking

Avocados Australia expects more than 50 per cent of avocado shipments out of Western Australia this year will be from first-time exporters.

WA-based The Avocado Collective was among those trying sea freight for the first time, and had built a $1 million sealed cold-docking facility at Manjimup to assist with the process.

The Avocado Collective’s general manager, Josh Franceschi, at the time said they would be delivering Hass avocados via sea to Singapore, Malaysia, Hong Kong, Indonesia and Japan.

“We are trying to find the sweet spot for shelf-life on the avocados and trialling different controlled-atmosphere methods to get the best results we can,” Franceschi said.

“We’ve got a controlled-atmosphere container, and will be running trials throughout the course of the season on shelf-life verification and fruit age.

“This season is going to be humongous; the biggest season we’ve ever seen. There’s going to be a huge increase in volume, which is why it is so important to develop the export market.”

Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.