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Industry stalwart reports grower confidence has never been higher
1 May 2015

After more than 40 years of growing avocados, Te Puke’s Ron Bailey says grower confidence in the export industry’s future has never been higher.

“Three years ago, bank managers were starting to get nervous and so were land agents when it came to the value of an avocado orchard. But the development of AVOCO has seen those attitudes shift.

“This season’s final payments to growers will lift confidence in our industry even more.”

The 2014-15 season has wound up with Bay of Plenty AVOCO growers receiving more than $15 a tray on an all size average for export fruit. These returns, achieved during a year of heavy volume, have been welcomed by local growers like Ron – many of whom were stung three years ago during the last heavy crop when returns fell to less than $10 a tray after some exporters over supplied the Australian market.

The disastrous results of 2011-12 were a catalyst for change in the industry and Ron was among a group of growers who called for exporters to work more collaboratively to avoid market collapse.

“Coming from a dairy industry background, I supported a single-desk export model that works for the likes of Fonterra but that model was never going to get 100% support in the avocado industry. Plus it would have been too expensive to implement.

“But after a whole lot of meetings, a proposal was presented that would see two export companies come together and that’s what we’ve got in AVOCO today.”

Export rivals Southern Produce and Primor set aside their differences in 2013 to form AVOCO and in doing so, became New Zealand’s largest avocado exporter. Today it exports on behalf of more than 700 growers - the bulk of whom have orchards in the Bay of Plenty.

Ron says the creation of AVOCO has led to better communication, more information-sharing and the kind of consolidated supply that leads to less volatile returns at the orchard gate.

AVOCO’s inaugural season in 2013-14 was a high demand, low volume season, resulting in tray prices in the mid to high 20s. During 2014-15, New Zealand’s record crop was seen as a real test for AVOCO which exported 2.8 million trays whilst contending with heavy volumes coming out of Western Australia and a high New Zealand dollar.

The $15-plus per tray average is considered a fantastic result considering the season’s tough market conditions, says Ron.

“Growers are receiving $5 to $7 more per tray than what we got three years ago when we had the last big crop. The AVOCO business model has proven itself in just two seasons and it’s changed the whole avocado industry for the better.”

Over the next three months, avocado growers will be asked to commit to new supply contracts for the 2015-16 season. Ron expects this season’s financial returns will prompt non-suppliers to take a second look at AVOCO.

 “AVOCO hasn’t just helped our growers – it’s lifted value for the whole New Zealand industry and secured its future. But in real terms for growers, being a part of AVOCO means they’re adding financial value to their own businesses - both in income and in the capital value of their properties.

“Growers considering their options should be mindful of that.”

The 2014-15 season set new industry records with 4.5 million trays exported out of a total crop of 7 million trays. So high were the volumes that export earnings are on track to exceed the $103 million generated in 2013-14 when tray prices were in the high 20s. Avocados remain New Zealand’s third largest fresh fruit export.

AVOCO’s share of exports this year was 62%. About two-thirds of shipments were sent to Australia while the remainder was split between the US and Asia and marketed through AVANZA.

AVOCO director John Carroll says it's incredibly pleasing that AVOCO had fulfilled its vision by delivering strong returns to growers in a challenging season.

 

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