Mexico sets sights on New Zealand avocado exports, economist says prices could drop

Mexico is looking at exporting avocado to NZ and Australia. Picture/Supplied.

Cheaper avocado prices may be in store if the world's biggest avocado producer, starts exporting to New Zealand.

AVOCO, a partnership between New Zealand's two biggest avocado exporters, Southern Produce and Primor Produce, said Mexico had set its sights on New Zealand and Australia as a possible export destination.

But it said it would be difficult for other growing nations to gain market access to New Zealand or Australia due to strict phytosanitary measures. "But outside interest should serve as a reminder to the industry that it could not afford to be complacent about its future,"AVOCO's marketing and communications manager, Steve Trickett, said.

Earlier this year, Australian government officials confirmed that they were starting a risk assessment for importing fresh avocados from Chile – the start of a process that could lead to that country gaining market access. As it stands, only avocados from New Zealand can be imported into Australia.

The Association of Producers and Packers Exporters of Avocado in Mexico (APEAM) this month signalled its interest in exporting to Australasia, stemming from Comprehensive and Progressive Agreement for Tran-Pacific Partnership (CPTPP) that was signed in March.

The agreement involves 11 countries in the Asia-Pacific region, including New Zealand, Australia and Mexico.

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Mexico is the world's largest avocado growing nation, and exports avocados all-year round. Marked seasonal crops in New Zealand and Australia, combined with growing demand for fruit, makes the two countries attractive and complementary new markets, according to APEAM.

"While success by Mexico to gain avocado market access to Australia and New Zealand is far from guaranteed, the company says it has a watchful eye on supply competition in Australia where growing avocado consumption there is making it an attractive option for other growing nations," Trickett said in a statement.

New Zealand's avocado sector, backed by strong product prices, has grown strongly in recent years.

Last week, Stats NZ said domestic avocado prices had risen 37 per cent in May to record levels after a small harvest.

The average price for a 200g avocado rose to $5.06 in May 2018, up 37 per cent from $3.69 in April 2018. The price in May this year, up 50 per cent from $3.38 in May 2017, is the highest ever for avocados since the series began, Stats NZ said.

ANZ bank rural economist Con Williams said local prices could fall if exports from Mexico went ahead.

"The price will depend on the quality of the fruit that you get from Mexico," he said.

"Mexican avocados are a bit smaller in stature and I'm not sure if the quality is quite as
high as local fruit," he said.

"But they are obviously the biggest exporter and producer of avocados so that will definitely have an impact on pricing, particularly in the April-July offseason," Williams said.

Trickett said there had been "euphoria" within the New Zealand industry following last season's strong returns.

However, Trickett said the harvest delivered the lowest volume in over five years and in many markets, demand exceeded supply for much of the season.

"While we remain positive about future opportunities for the category, we also urge caution that a bumper crop is just one good fruit set away.

Markets and competitive forces do change, so we continue to encourage growers to focus on ensuring access to all export markets available to us," Trickett said.

"Avocado consumption in Australia keeps growing every year and with that growth comes real value, but we've always been careful to manage our markets responsibly and not rely too heavily on Australia," he said.

In 2018-19, AVOCO said it was likely to send about 80 per cent of its volumes to Australia and 20 per cent to Asia.

In terms of competitive pressures in the Pacific Rim - where New Zealand's market diversification play is expected to be targeted - the North/South American competitors – particularly Mexico, Chile, Peru and Colombia – will provide the stiffest competition, ANZ's Williams said.

These four producers account for around 70 per cent of global exports and these have grown at 19 per cent per annum over the past five years. "Other" exporter growth is running at only 10 per cent over the same period.