The partnership that revolutionised the New Zealand avocado industry is celebrating 10 years.
Avoco was formed in 2013 and marked a partnership between New Zealand’s two biggest avocado exporters, Southern Produce and Primor Produce, in a bid to coordinate and grow the supply of export avocados.
The anniversary comes as New Zealand for the first time plays host to the World Avocado Congress (WAC), with Avoco as a major sponsor of the global event.
“The New Zealand avocado industry was at a crossroads in 2011-12 after growers received soft returns for their export fruit. This was the result of many Kiwi exporters putting all their eggs in one basket and flooding the Australian market, on top of increasing Australian production,” explains Avoco co-founder and director of Primor Produce John Carroll.
“No one wanted a repeat of 2011-12 and for Southern Produce and Primor, the year was a catalyst for change.”
The two companies listened to New Zealand growers and took on board their need for a more collaborative industry. Growers said they wanted better communication between exporters, more information-sharing and the kind of consolidated supply that would lead to less volatile returns at the orchard gate.
The result was Avoco – a grower-led organisation that manages and exports on behalf of around 700 growers across the Bay of Plenty and Northland. These are growers who have signed up to supply Avoco with the knowledge and satisfaction that they’re supporting a model that has the best interests of both the grower and industry at heart.
Being grower-led means Avoco already understands how most growers tick and what’s important to them.
“Avoco’s structure, long-term view and approach to building market relationships and providing long term stability of returns has proven valuable both in the buoyant times, and in the more challenging,” says Carroll.
“This is about creating an industry that has a future, where we can encourage growers to invest and nurture the industry. Being part of WAC was great to take stock and look at the industry globally, addressing both the progress we’ve made and the inevitable challenges in this current climate.”
While the well-known international headwinds in recent years, particularly around shipping and weather events, have made conditions more challenging, Avoco’s united focus on building the strength of export market relationships has come into its own.
By working collaboratively and developing markets outside Australia under the AVANZA brand, Avoco aims to maximise returns to growers every season but especially when volumes are heavy.
Prior to the pandemic approximately 75% of supply is exported to Australia, with around 25% to eight Asian markets under the AVANZA brand. AVANZA was established by Avoco partners 21 years ago with the specific task of developing new markets and is New Zealand’s largest avocado exporter to Asia.
Recent challenges
In recent times, particularly due to Covid related factors, sustained development and volume growth has been challenging.
“Last season saw a combination of rain events, market compliance and shipping service issues constrain the volume ultimately exported into Asia to just 13% of the Export Pool. Equally, consumer demand for avocados throughout Covid has been erratic. Yet our early planning suggests we have potential to do more both in volume and pool percentage terms this coming season,” says Carroll.
As well as industry leading orchard gate returns (OGR), Avoco growers also get access to expert technical advice, regular market updates, and the shared knowledge of growers who have “been there, done that”.
“Avoco’s continuing mission is to further international success of the New Zealand avocado industry,” adds Carroll. “Operating as a joint entity, Avoco has created a commercial force that has the scale to manage harvest volumes and fruit flow better than ever before.”
While the exact figures are yet to be finalised, the ‘early bird’ crop estimate received from the six Avoco packhouses unsurprisingly hints of an export tray volume below that of last season’s 1.46 million trays – Avoco’s second-lowest volume in ten years.
This does pose a conundrum, as customer demand across all markets far exceeds projected volume available. With a continued overarching objective to maximise the Export Pool outcome for Avoco growers, some of AVANZA’s new market development plans may have to be scaled back.
“Avoco continues to enjoy a strong and privileged position as the major supplier to Australia’s valued retail customers. These programmes, together with more targeted exports being planned for a selection of AVANZA’s Asian customer mix, will provide the best outcome possible for growers,” says Carroll.
“We will continue to reserve and allocate a significant portion of the prospective pool volume to Asian markets to maintain AVANZA’s brand presence there, and as with Australia, OGR prospects will primarily drive our market prioritisation and customer allocation decisions.”
Despite projections of a significantly larger domestic crop, the Australian supermarket customers will inevitably continue to receive the lion’s share of Avoco’s volume, explains Alistair.
“The wholesale markets in NSW, Victoria and Queensland will likely be more subdued, so we will keep volume to a minimum there and focus on the best returning Asian markets for the balance of Avoco crop.
“Other initiatives are also being considered to maximise outcomes for growers. With greatly reduced Export Class 1 availability resulting from the recent storms, strategic use of Class 2 comes back into play. This allows us to free up Class 1 fruit targeted at premium customers and market sectors and adding a segregated prepack programme offering to our Australian supermarket customers served directly.
“Accordingly, market managers have been tasked to explore and pursue customer opportunities for greater absorption of Class 2 both in Australia and certain target markets across Asia, either in the food service sector or as a new ‘fresh offering’, subject to HEA and Product Group approval.”
In the past two seasons AVANZA has been progressing modest export programmes for Class 2 to food service customers in markets such as Taiwan. It is therefore timely to ramp up this activity given the impact of Cyclone Gabrielle on cosmetic fruit quality, and while there’s also evidence of more ridging on fruit this season.
Where possible, Avoco will also be looking to expand sales opportunities for Class 3 and Process Grade fruit in the ‘value add’ sector of the Australian market. The scope for this will be largely influenced by domestic volumes and pricing on offer to such outlets.
