Avoco proves the power of unity

Rex Scharnweber says Avoco has stopped the industry from self-destructing. Photo / File

Confidence in the industry surges as the organisation triumphs in tough market conditions and generates a much better price

After more than 20 years of growing avocados, Rex Scharnweber says grower confidence in the export industry's future has never been higher.

"A few years ago the export sector was in dire straits. There was a lot of in-fighting. Each exporter was protective of their own little patch and there was no real communication between any of them.

"They'd put growers first within their own organisation but they weren't concerned with the rest of the industry. I truly believe the formation of Avoco basically stopped the industry from self-destructing."

Avoco has announced its final payments to growers for the 2014-15 season, which Scharnweber says will lift confidence in the industry even more.

Whangarei and Far North growers have received more than $15 a tray for their large fruit and $13.50 a tray for small fruit. These returns, achieved during a year of heavy volume, have been welcomed by local growers such as Scharnweber, 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 oversupplied the important Australian market.

The disastrous results of 2011-12 were a catalyst for change and Scharnweber was among a group of Northland growers who supported calls for exporters to work more collaboratively to avoid market collapse.

"There were those who wanted a single-desk export model but that would have been too expensive to implement.

"Eventually a proposal was presented that would see two export companies come together and that's what we've got in Avoco today. It's the best thing that's ever happened to the industry."

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 in the Far North, Whangarei and the Bay of Plenty.

This season Scharnweber produced a 40-tonne crop off his 1.7ha canopy orchard at Maungatapere. He says the creation of Avoco has led to better communication, more sharing of information 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 while contending with heavy volumes from Western Australia and a high New Zealand dollar.

Orchard-gate returns in the mid-teens are considered fantastic results considering the season's tough market conditions, Scharnweber says. "During previous big seasons when the volumes were high, growers were getting single-figure returns and that's just not sustainable.

The fact that Avoco has managed to achieve what it set out to in just its second year proves that it's a business model that works."

Over the next three months avocado growers will be asked to commit to new supply contracts for the 2015-16 season.

Scharnweber expects this season's financial returns and its proven track record will prompt non-suppliers to take a second look at Avoco.

The 2014-15 season set industry records with 4.5 million trays exported out of a total crop of seven 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 are New Zealand's third largest fresh fruit export.

Avoco handled 2.8 million trays, accounting for 62 per cent of all exports. About two-thirds of shipments were sent to Australia but critical to the success of this season was market diversification. Avoco adopted an export strategy that allowed Australia "to breathe" during potential periods of oversupply and the United States served as a "release valve" with considerable volumes shipped to the US through the Avanza marketing channel.

"Growers outside Avoco should be thanking Avoco for what it's done because if they hadn't sent fruit to the US the whole industry would have suffered."

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