Fast Growing Crops Look to the Future

Avocados have been among New Zealand’s fastest growing horticulture exports since 2000. But how are they faring now? We look at the state of the market, and what lies ahead.

New Zealand horticulture has experienced a golden era this millennium, with exports nearly quadrupling from $1.7 billion in 2000 to $6.7 billion in 2021, according to the most recent Fresh Facts report funded by Plant & Food Research and Horticulture New Zealand. Growing Together 20235 – The Aotearoa Horticulture Action Plan, an industry document released this year, plans to grow horticulture exports to $12 billion by 2035.

While the bulk of the industry’s recent export growth was driven by the ‘big three’ of kiwifruit, wine and apples, some other stand-out horticulture exports emerged during this period. Avocado exports saw impressive growth, rocketing up by 700 percent from $25.2 million in 2000 to $201.6 million in 2021.

Farmlands Head of Sales and Strategy – Horticulture, Chris Binns, says there were several factors behind the recent rapid increases in exports for emerging fruits, including economic and technological. “Over that period globally we have seen the growth of the middle class in developing nations, which has driven demand for these products. There has also been an increased awareness of the health benefits of foods like avocados.”

However, he notes that the past couple of years have been much more challenging for growers across the horticulture sector. “First you had the Covid travel restrictions, which led to labour shortages across the industry,” Chris says. “Then over the past couple of years you have had rising input costs, while growers in many areas of the country have been dealing with severe weather events that have damaged fruit and, in some cases, ruined whole crops. There are also some export products that are experiencing an oversupply, following rapid increases in production both here and overseas.”

Avocado Glut Tipped to Last Years

After years of rapid growth, avocado exports suffered a severe 60 percent drop in 2022 to just under $80 million. Parts of New Zealand have seen significant new plantings of avocados in recent years, particularly Northland where several large corporates have joined the fray.

This has led to significant increases in the industry’s production capacity. A report last year by Rabobank said New Zealand’s avocado production was forecast to grow by an average six per cent annually over the next five years, reaching 57,000 tonnes by 2026 — up from 44,000 tonnes in 2021. 

But second-generation Northland avocado growers Garry and Charlene Cliff say the local avocado industry is already in crisis. Five years ago, they were getting between $26 and $39 dollars per tray for exports and $15-$20 per tray on the local market. This has now dropped to $12-$15 dollars per tray for exports and $4-$9 per tray for the local market. With costs rising for inputs like fuel, along with increased regulatory costs, many growers are struggling to break even.

“At the moment there’s a global over-supply of avocados, and the crap weather we’ve been having has affected quality,” Garry says. “We’re already seeing guys flattening blocks of avocados, and the other thing the weather has done is some of those marginal blocks are actually dying out because of the wet soils. We went to the World Avocado Congress (held in Auckland in April), they had some analysts there and they’re talking about 2028 before supply and demand line up again.”

Charlene says avocado growers have already had three tough years. “When we had Covid, that was hard, the following year was hard with the labour and shipping and actually getting people in to do the work.

We’ve had the cyclone, that’s just topped things off for most people, not only financially but the mental wellbeing side of it as well. It’s hard and it does affect a lot of people.” 

One of the big trends in New Zealand’s avocado exports is the switch away from what has been our main market, Australia. Figures from industry group New Zealand Avocado show exports to Asia tripled in 2021/2022 compared to the previous year. Garry says that traditionally most of New Zealand’s avocado exports have gone to Australia, but that is about to change.

“As Australia’s production has come online more, we’ve kind of got pushed out of there. The focus has gone on the Asian markets like Hong Kong, Taiwan, Indonesia and Thailand. The Pacific rim is our focus, that’s really as far as we can go shipping wise to get reasonable avocados there. That’s our limiting factor.”

Farmlands TFO Philip Elliot says avocados need good volcanic soil that is well-drained, as well as a decent amount of sunshine and warmth. “Obviously you won’t be growing them down in the South Island very well, but they go well in places like the Bay of Plenty and Hawke’s Bay, Dargaville where there’s some new development going in, and the far North.”

Philip says one of the features of growing avocados is the low cost to get started, with few barriers to entry, meaning people can dabble in them if they have suitable land. “Like anything you get that economy of scale – the bigger you are the more effective it is, up to a point. However, there are no licensing fees, so you’re looking at the cost of trees, irrigation, things like that, so it’s not a high-cost industry to get into.”

Hass avocados, which change colour when they are ripe, are likely to continue to dominate the market globally, Philip says. “The only real advances on the technical side of things in the last 10 years would be clonals (cloned plants), but they come with their own issues. When you clone them, they have shallow roots, so in the latest storm when everyone’s trees fell over it was basically the clonals.”

One of the major reasons for global growth in demand for avocados is their health benefits. Garry says New Zealand avocados score well not only on blind taste tests, but in terms of their oil content, thanks to our climate. “My parents have had avocados since the late 1970s. When I went to school people didn’t even know what an avocado was.”

Trade Deals Offer Hope

While the economic outlook depends on what type of fruit or vegetable you are growing, recent progress on free trade is encouraging news for the sector. In May the government announced a Free Trade Agreement with the United Kingdom that will eventually eliminate all tariffs on New Zealand goods to Britain, while in July a similar deal was signed with the EU (subject to approval by the European Parliament).

The deals offer significant upside for New Zealand growers, with continental Europe already our biggest market for horticulture exports ($1.2 billion in 2021) and the UK the sixth biggest ($514 million). Farmlands Head of Sales and Strategy – Horticulture, Chris Binns, says the free trade deals are “not a home run by any stretch”, but certainly a positive lift that the industry needed.

“The new free trade deal with the UK offers a shining light for our fruit and vegetable industries. Any deal that has the potential to lift a market’s size or increase a grower’s return is obviously beneficial. If we can further spread our exports across multiple countries, hopefully that will lead to better economic returns across all markets, with less risk of oversupply.”

Chris says that while some parts of the sector are going through a challenging period, the long term outlook for New Zealand horticulture is still bright. “The golden era is not over; it’s just hit a speed bump.”