Vessel delays, potential competition from Chile and a smaller New Zealand fruit size profile is keeping a lid on expectations in terms of what the Australia’s avocado market can deliver for growers here at home.
Australian-grown avocados are in shorter supply this season, which typically creates a trading environment where demand for New Zealand fruit soars as retailers look to fill any gaps in their supply.
This demand trend is already evident but Avoco, New Zealand’s largest supplier of export avocados to Australia, is closely monitoring signs of any challenges in the market that could impact pool results come season’s end.
Most of these challenges, including disrupted shipping schedules, vessel delays and industrial action at Australian ports, are out of exporters’ control, says Avoco’s Marketing and Communications Manager, Steve Trickett.
“Starting our export season knowing that Australia’s avocado harvest was down on previous years gave us confidence that 2020-21 would generate solid returns for growers, especially with our strong retail programmes put in place with supermarkets early.
“Two months in and sales values across the Australian market remain strong with favourable demand and generally good quality. But factors relating to shipping, some of which are a hangover from the earlier stages of the COVID-19 pandemic, are negatively impacting the timely delivery of goods to Australia, including avocados.
“This is a real concern to us due to its potential impact on fruit age and quality at the final stage of the supply chain.”
The global shipping environment has been disrupted by numerous factors. COVID-19 has been a common denominator to many, as shipping lines try to reset vessel schedules and reposition shipping container inventories to and from various ports around the world. Additionally, the earlier typhoon season in North Asia and bad weather off the East Coast of Australia had also dented the integrity of shipping schedules.
Combined with rolling industrial action taken by Australian port workers, the delays and unreliability of container delivery times has required 24/7 micro-management to keep programmes on track, says Steve.
“By the time our fruit has cleared and is in Australian warehouses, 26 to 30 days may have passed since the fruit was harvested. This is right on the cut-off boundaries for acceptance by our retailers.”
Ideally, fruit arrives in Australian stores no more than 30 days from being picked.
“We’ve been able to manage the fruit inventory going into retail programmes without compromising quality or the consumer experience so far, but this has also seen us having to reassign older fruit to wholesale market customers. The use of processing outlets is also considered when fruit age is no longer suitable for sale in the fresh market. So, between now and February or certainly until shipping services improve, the issue with the greatest potential to impact the season’s outcome will be fruit age.”
The prospective competition from Chile, which was granted market access to Australia for the first time this season, is a new consideration. However, the impact of this is still unclear, says Steve.
“Albeit shipping relatively small volumes, it appears Chilean exporters are continuing to send semi-regular sea freight consignments to Australia. It is possible that they may ramp up supply over the traditionally high-demand summer period, which is a window we target as well. While this is not expected to greatly influence our retail programmes, it has the potential to disrupt the wholesale sector.”
COVID-19 lockdown restrictions have eased in most Australian states and there are still opportunities to benefit from consumers keen to focus on their health and eating well, especially where supermarkets and home delivery services are operating ‘as normal’. Avocados in that sector are selling well.
However, Steve says the food service and hospitality sectors are still struggling in some cities and, in turn, this is impacting the wholesale avocado market that normally serves them.
“With our strong position in the Australian retail sector, this isn’t a major issue for Avoco, but it’s still a consideration that affects the market’s overall performance.”
Avoco expects to ship about 2.5 million export avocado trays this season, with about 90% destined for Australia. The remaining volume will be split across developing Asian markets and marketed under its AVANZA brand.