Growers must ride out US avocado hiccup

By ROSALIE SMITH

The ripples from the September 11 terrorist attacks in the United States have spread as far as the New Zealand avocado industry.

Many Americans have stopped eating out, and tourism has slumped.

New Zealand grows big avocados, for which a market has developed in the food service industry; so from September 11 demand for New Zealand avocados plummeted. Stocks built and prices fell.

Avocado growers here have two export markets: the US from September to the end of November, and Australia from November to March.

Our avocados take more than 20 days to reach the US market but when growers heard about the drop in prices their immediate reaction was to stop picking. Some exporters could stop shipping but the major exporters who have built close relationships with US handlers could not afford to walk away from shipping and marketing programmes developed before the season began.

New Zealand is a tiny player in the world export market, but the industry faces huge crop increases over the next few years - 60 per cent of trees in the ground are not yet producing any fruit. The US market is critical to its future.

The Australian market is looking promising, with domestic fruit tailing off early but it can take only so much fruit. Major exporters have programmes with supermarket chains, sending predetermined volumes each week. The wholesale markets are much more vulnerable to oversupply and prices there influence supermarket prices.

If too many growers desert the American market the Australian market will be overloaded and a price collapse likely.

As soon as the major exporters were aware of the slow movement and falling prices in America they alerted the Avocado Industry Council, which acted rapidly to collate all exporters' flow plans to Australia and identify weeks when the markets were likely to be over-supplied.

Members met growers, packers and all the exporters to persuade them to pick, pack and ship to a co-ordinated programme. Growers were also told of the importance of continuing shipping to the US. One export cooperative plans to continue its programme through January, believing lengthening the US export season is vital in view of expected crop increases.

The industry is fortunate that this is a low-crop season and production will be about the same as last season. The previous season saw a 33 per cent jump and next season's increase looks likely to be even greater.

The effect on growers' returns will vary from exporter to exporter. One has a single grower pool for the season, so the lows in the US market will be balanced by better returns in the Australian market, if they eventuate. Other exporters have pools covering no more than a fortnight, and some offer fixed prices for each grower consignment.

Those whose fruit arrived in the US after September 11 and are not in a pool covering a lengthy period will barely cover their costs.

The good returns achieved by the avocado industry over many years are the result in part of the co-operation among exporters, growers and packers. The industry has trodden on the heels of the kiwifruit industry and has managed to dodge some of its pitfalls.

Growers are satisfied with 10 exporters, four of them dominating, and all operating under the Horticulture Export Authority.

Each year exporters sign up to a marketing strategy and the authority has teeth to prosecute serious breaches of that strategy. Successful cases brought against two exporters a few years ago added weight.

Apple growers recently turned down a proposal that their product come under the authority.

I hear of more and more would-be apple exporters keen to get into the action in the coming season. If price-cutting results from too many exporters chasing the diminishing number of supermarket chains, they may need to learn from the avocado sector and reconsider the authority alternative.

* Rosalie Smith is a freelance journalist specialising in horticulture