6.7     Avocado

6.7.1 Industry profile

The New Zealand avocado industry has expanded to become a very important sector in Northland and remains a significant sector in the Bay of Plenty. The demand for new trees has seen the growth of two large tree nurseries, in Whangarei and Gisborne, further increasing the employment opportunities in horticulture in the regions. It remains a vibrant industry across more than 4,400 producing hectares with new investment into larger, more intensively planted orchards, mostly conversions from dairy farms. With more than 1,600 growers, there is a real diversity of growers, from the very large to very small orchards.

The New Zealand avocado industry has experienced significant growth in value reporting $230m in the 2020-21 season, up from $60m in 2012 when the industry sought new ways to improve grower returns. The Crown investment into the Primary Growth Partnership was a fantastic lever to allow investment right across the value chain, in productivity, in the supply chain and systems and in market development.

The 2021-22 season saw a very sharp decline in total domestic and export value to $123 million following a collapse of value in the Australian market. This was caused by a domestic over supply in Australia, where volumes nearly trebled from the previous season. New Zealand exporters reacted swiftly to direct three times the previous year’s volume to eight markets in Asia. This was at a time when freight costs had spiralled, freight was disrupted, and with Covid, exporters could not visit those markets. These record volumes were sold across eight markets, meeting a strategic objective of the original Primary Growth Partnership to increase market diversification. Over ten percent of volume destined for export was left in New Zealand due to ships not arriving, or changing their route. Value returned to growers was significantly impacted with export earnings halved.

The ability to move volume to Asia was supported by the launch of new collateral, the Triple Active and Respectful Harvest campaigns. These are targeting the nutritional and sustainable attributes of New Zealand grown avocados. Over 1,000 consumers across five Asian countries were included in research that highlighted that antioxidants, folate and omega-three are the three most important health attributes of avocados. Triple Active highlighted these attributes in a vibrant new campaign, with fresh imagery and the use of people rather than just avocado dishes, to highlight the amazing benefits of avocados to human health. Respectful Harvest is a new trust mark, confirming the respect given to the environment, the people and the systems that surround the avocado from tree to shelf. This is supported by sustainability research, looking at best practice water use, effective agrichemical use, improving canopy management for improved quality and production and a life cycle assessment study that will be released later in 2022. Economic sustainability for growers is dependent on increasing yields and quality. Productivity has increased slightly with better application of best practice though it remains low across many orchards. The economic sustainability of orchards is dependent on bringing productivity up to a consistent 12-15 tonnes per hectare, or more.

New Zealand produces less than 2% of global production so in most markets is a very minor player. Competition is very high, and New Zealand’s cost of production is much greater than Central and South America, where most avocados are produced. Any additional barriers, tariffs or costs incurred lessens exporters’ ability to return value to growers. High season volumes from other producers can completely shut New Zealand avocados out of a market, as high volumes often bring the price down, making it uneconomic for New Zealand avocados in that market.

Freight issues saw a record volume of export avocados diverted, often at little notice into the New Zealand market. This created high volumes, but the market continued to perform well. Value per tray was down, but market performance was consistent, and more consumers than ever before included avocados in their weekly shop. Avocados have 19 vitamins and nutrients, including those necessary for a healthy immune system. An increased focus from consumers on health and wellness and their versatility has contributed to the growth in New Zealand avocado consumption.

New Zealand Avocado is the industry body for avocados, and supports the industry across the value chain from nurseries through to growers, packers, marketers and exporters. New Zealand Avocado undertakes activities including research and extension, managing export systems, industry biosecurity, resource management and market access to support growers both protect and optimise their investment in avocados.

Growers are members of the New Zealand Avocado Growers Association, which has a 100% owned subsidiary New Zealand Avocado Industry Limited, as its operating entity. The association is recognised by the government as representing New Zealand avocado growers. In that recognition comes the requirement that any avocado exporter must be licensed with the New Zealand Horticulture Export Authority (HEA). In 2022, there are ten licensed exporters and 12 registered packers involved in the export of New Zealand avocados. Avocado has been a prescribed product under the HEA since 1989. New Zealand Avocado Industry Limited is the recognised product group, made up of growers, packhouses and exporters.

Under the export marketing strategy for avocados, all avocado growers, packers and exporters must comply with mandatory industry food safety, quality and phytosanitary requirements for export. These systems are audited by the government-owned agency AsureQuality.

New Zealand Avocado is hosting the 10th World Avocado Congress on 2-5 April 2023 in Auckland, New Zealand. New Zealand only accounts for 2% of global trade but New Zealand won the right to host this prestigious four yearly global event at the 2019 Congress in Colombia. World Avocado Congress NZ Ltd has been set up with an independent board, sponsorship is being sought and the New Zealand Avocado team are passionately developing a terrific congress. This may be the first global trade event since New Zealand opened its borders and provides a tremendous opportunity for New Zealand horticulture and primary industries to be showcased on the world stage, sharing our successes, our culture and our future thinking.

6.7.2 Exports

The avocado industry is the sixth most valuable horticultural export group in 2022, falling from fourth in 2018 and fifth in 2020. The total value of avocado exports decreased by 29% compared to 2020 to be worth $80 million in 2022, although there was a 5% increase in total volume.

Australia is the main export destination for avocados accounting for 59% of total volume exported. There was a 47% decrease in value to $44 million and a 19% decrease in volume for exports to Australia. The value per tonne of exports to Australia has decreased from $6,864/tonne in 2018,

$4,660/tonne in 2020, to $3,035/tonne in 2022. Exports to Thailand decreased 40% in value to $5 million with a corresponding 24% decrease in volume.

Export growth to Hong Kong and China was notable with 21-fold and a 3.6-fold increases in value respectively. Exports to South Korea increased 75% to $10 million and to India increased 67% in 2022.

Table 6.7.2: Avocado (0804.40.00.01, 0804.40.00.09) export markets 2020-2022 (year ending June, tonnes, $NZ FOB)

6.7.3 Barriers to export

Cost of Tariffs

Australia remains the largest single market for avocados importing 59% by value, where there are no tariffs because of CER. South Korea is a growth market and currently has a tariff at 6% which has decreased from 12% in 2020. Under the New Zealand-Korea FTA, the tariff for avocados will decrease to zero by 2024. Under CPTPP, the tariff into Japan was removed on 30 December 2018. The tariff rate in Taiwan was also removed in 2018, under the ANZTEC Agreement.

The 30% tariff imposed by India may be stifling export growth to this market. Tariffs on exports to India represents 45% of tariff costs which is paid on just 2% of export value. High tariffs are likely to remain as negotiations on a New Zealand-India FTA have stalled. The tariffs imposed by South Korea and India costs each avocado grower an average of $711.

Table 6.7.3: Cost of avocado tariffs (based on 2022 FOB value)

SPS market access barriers

Australia. Australia is New Zealand’s largest export market for avocados. The offshore pre-shipment inspection (OPI) programme has been replaced by the Compliance-Based Intervention Scheme (CBIS) which rewards and applies intervention rates based on importer–supplier compliance. The entire supply chain from orchard to postharvest are implementing measures to better manage avocado pests. However regular pest interceptions remain for egg and juvenile organisms, where incomplete pest identification results in precautionary actions being taken on potentially non- actionable pests.

China. New Zealand gained market access to China in January 2018. Trade to China is under an Official Assurance Programme (OAP) overseen by MPI, which requires annual grower, packer and exporter registration as well as pest monitoring and management in orchards and through post- harvest measures. Based on feedback from industry, New Zealand Avocado continue to seek improvements in the export programme to ensure practicality and its alignment with existing industry systems.

Thailand. In 2015 there was a trade agreement between New Zealand and Thailand which resulted in enhancements being made to the Thailand Importing Country Phytosanitary Requirements (ICPR). These sought to formalise pest measures at both the orchard and post-harvest level along with a requirement to submit grower and packer registers to Thailand.

Viet Nam. Viet Nam is seen as a potential new avocado market and MPI has been requested to pursue this. Viet Nam will need to conduct a pest risk analysis (PRA) and several other commodity PRAs are already in progress by Viet Nam, or in the queue.

USA. New Zealand currently exports avocados to the USA under a historic ‘LBAM export work plan’ developed in 2010. As of December 2021, the US agriculture authority (APHIS) removed the quarantine/import requirements for Light Brown Apple Moth host material and reclassified LBAM as a non-quarantine pest. MPI are currently in discussions with APHIS to understand the specific changes to the import requirements before they update the USA ICPR.