Australia will need to both consume and export more avocados as the nation’s growers navigate a period of soaring production growth over the coming five years, Rabobank says in a new report.
This year alone, the per capita supply of avocados is estimated to be up 26 per cent on the previous 12 months to 4.8 kilograms, equating to 22 avocados for every Australian.
Rabobank says a significant maturing of avocado trees in the past season – primarily in Western Australia and Queensland – has resulted in a bumper crop, causing a national oversupply and seeing retail prices fall to a record low of $1 each in June last year and again early this month. Retail prices for 2022 remain tracking at 47 per cent below the five-year average.
RaboResearch associate analyst Pia Piggott says that while the low prices have been welcomed by consumers currently facing significant price rises for many other food items and household staples, they have put considerable pressure on grower margins, already squeezed by increasing input costs and labour shortages.
Supply boom
The report says Australia’s avocado market is “cycling through a period of significant production growth”.
Piggott said industry estimates of avocado production in WA are up by a staggering 265 per cent on the previous year.
“This was driven by a 21 per cent increase in the hectares of avocado trees in WA that reached maturity and produced fruit in this season, coupled with optimal growing conditions in the state.”
WA – along with imports from New Zealand – supplies the majority of Australia’s avocados during the spring and summer months.
All other Australian avocado-growing regions – except North Queensland, which had seen a record harvest the previous year – have also seen slight year-on-year increases in production in 2022, the report says.
Overall, Australia’s avocado production for 2021/22 is estimated at 124,000 tonnes. Coupled with estimated imports of 12,500 tonnes for the year, this has meant abundant supplies for consumers.
Just the beginning
The past year’s market oversupply in Australia was “just the beginning”, the report says, with industry forecasts that domestic avocado production will expand by 40 per cent (50,000 tonnes) in the next five years, reaching 173,000 tonnes in 2026.
Piggot says all avocado-growing regions in Australia are expecting production growth.
However, growth will not be linear and consistent, with Western Australian avocado trees having an irregular production cycle.
“Significant weather events and drought are also likely to affect the country’s avocado production, while the recent Varroa mite incursion in Australia may pose a threat to pollination and therefore production, and there is likely to be some industry consolidation along the way as well,” Piggott said.
Regaining balance
Regaining balance in Australia’s avocado market requires both “increased domestic demand and larger export volumes”, Piggott said.
Consumer appetite for the likes of smashed avocado and avocado smoothies remains healthy, both in Australia and abroad – with local demand forecast to continue to grow while consumer demand is also expanding in offshore markets, providing Australia’s export sector with a platform for growth, the report says.
Australian households are eating more avocados, as well as spending less on them.
In 2021/22, the average volume of avocados consumed by each Australian household increased 31.2 per cent on the previous year, the report says. This is despite households spending 29.1 per cent less on avocados, due to lower prices.
Consumer market dynamics have also improved, Ms Piggott says, with the percentage of Australian households buying avocados up six per cent on the previous 12 months.
“Avocados have a strong health halo and are price competitive amid the broader cost of living pressures and this has supported Australian domestic demand,” Piggott said.
However, increasing consumption of avocados in Australia will not be enough to use up the additional local production in coming years, and ramping up exports will be critical in ensuring the market finds a better balance to support sustainable prices for growers.
Headroom for export growth
Australian export volumes of avocados have already increased by more than 350 per cent in the past year, the report says.
“The Singapore and Hong Kong markets have been stand-out performers, with Australia growing to account for 46 per cent and 12 per cent market share of their avocado imports, respectively,” Piggott said.
“Malaysia remains an integral export market and has re-bounded from Covid-related impacts, with Australian exports making up 46 per cent of the total imported avocados into Malaysia. Exports to the rest of the world are also up, including to the Middle East and Japan.”
Strong export growth continued into 2022, with Australian avocado exports of 2,800 tonnes in quarter one.
The rise of avocado consumption in Asia – as a growing middle class embraces the health aspects of the fruit – presents an ongoing opportunity for exporters worldwide, the report says.
Notably, competition is on the rise from other exporters, such as Mexico and South America.
Other challenges include significant trade barriers, with Australia currently having either limited or no access to three of the largest avocado-importing markets in Asia – Japan, China and South Korea.
“While exporting provides the greatest opportunity for Australia’s avocado industry to attract a good price and improve revenue, ensuring high export quality is paramount to maintaining the reputation and premium of the fruit, and continued investment in improving export access remains a key priority for the Australian avocado industry,” Piggott said.
