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AVOCO hints at strong OGR after successful season
1 April 2015

New Zealand’s largest avocado exporter, AVOCO, is hinting at strong Orchard Gate Returns for growers this season on the back of surprisingly high demand for its product in Australia and across Asia.

This final OGR, due to be released later this month, is expected to be welcomed by AVOCO’s 700-plus growers and spark interest among non-suppliers – all of whom have contributed to a record-breaking year for the industry.

About 4.5 million trays were exported out of a national crop of over 7 million trays. New Zealand’s previous high was 6.2 million trays total crop in 2011-12 when 3.7 million trays were sent offshore.

About 63% of the industry’s total exports have been handled by AVOCO this season since harvesting got underway at the end of August. About two-thirds of shipments went to Australia while the remainder was split between Asia and the US and marketed through AVANZA.

AVOCO director Alistair Young said a financial analysis of the record-breaking season began in February after the final shipments were sent to Australia. Figures are suggesting the 2014-15 OGR result would be a pleasant surprise for growers who have historically received low returns for their fruit in years of high volume.

“We’re still crunching the numbers but we believe the result will reflect the strong effort our teams put into managing this season’s record crop which presented us with a range of challenges and opportunities.

“Our growers supplied us with top quality product and our marketing teams did an outstanding job of raising awareness of our fruit in Australia where consumption grew by more than 35%,” he said. “This exceeded all our expectations as we were competing against large volumes coming out of Western Australia and sending our retail customers more fruit at the same time. This increased demand gives us real confidence about the future under AVOCO.”

In 2011-12, growers received less than $10 a tray after New Zealand exporters flooded the Australian market – a result which prompted export rivals Southern Produce and Primor to merge and form AVOCO in an effort to better manage the flow of fruit.

High consumer demand in AVOCO’s inaugural 2013-14 season was also a low fruit volume year, resulting in tray prices in the mid to high 20s, adjusted for fruit sizes. This high volume season was always expected to test AVOCO and its vision with market diversification seen as critical to its success.

One third of AVOCO’s exports were sent to the US and Asia through AVANZA, which handles 93 per cent of the industry’s shipments outside Australia. The US market, in particular, served as a valuable “release valve” this season with just over half of AVANZA’s volumes shipped to the US in a programme run in conjunction with US-based Mission Produce.

Investment in marketing activity to develop consumer interest in New Zealand avocados across Asia also paid off.  Sales in Japan and Singapore grew by 144% and 78% respectively this season.

Director John Carroll said working together as a combined entity gave AVOCO its strength to coordinate and manage the supply of fruit with this season’s success proof that it could still achieve excellent returns to growers and the industry in years of heavy volume.

“With critical mass we have the ability to draw from a larger pool of people who are making intelligent, strategic decisions about our exports and that ultimately helps to make the New Zealand industry and its growers more profitable in the long run.”

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Partners: Southern Produce, Primor, Team Avocado