Export success in Japan has turned into a commercial dead end for Daintree Fresh's melons as Shaun Jackson explains. He's had to step back from a once high-performing market that no longer stacks up on price.
"We had a very successful year last year, we actually had an expo in Osaka, our melons in competition, and we were chosen over and above some of the domestic melons, so we were right up at the top end of the quality," Jackson says. "We were moving about ten thousand boxes a week, many of them air freight out of Cairns and some sea freight out of Brisbane. Every wide-body's belly was full of Daintree Fresh melons going to Osaka and Tokyo, and everything was selling well and building up more and more customers."
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That momentum ran into a hard commercial reality. "I'd agreed to a price, and they got pressure from international competition from Honduras and California and Mexico, and price drops on honeydew, and cheap pineapples from the Philippines, and that put pressure on us," he says. "The net return ended up being lower." Currency shifts compounded the issue. "They basically said they couldn't pay any more because the yen is losing pace to the Australian dollar, their costs are high, so they can't do anything about it."
Despite strong demand and brand recognition, the numbers no longer worked. "I told them that I was struggling, I made no money last year, so I've got a bigger hole to fill, so I need another $9 to be able to do it." While some buyers agreed to higher prices, "there's not enough," he says. "At that number, it's not enough, so I'm dropping it all this year, and we're just doing watermelon domestically."
Jackson is careful not to assign blame. "I've absolutely made a point of telling the Japanese I'm not blaming them, because their interest rates are a lot lower than ours and their wages are lower, I understand that they're under pressure." But the structural gap remains. "In this day and age, to produce a crop in Australia, you've got to turn over a certain volume to justify the margin, and at that number it's not enough."
The pricing disconnect is a persistent frustration. "I want to ask big retailers and importers how come a coffee at the airport is worth six bucks, and you think that's the top value for a melon or it won't sell."
At home, the season has presented its own challenges, with extreme rainfall disrupting operations. "This wet's been horrendous this year, we've had something like 1.6 metres," he says. Managing that has been complex. "We had great difficulty. We had to use drones to spray the weeds down, and we protect against it by leaving last year's plastic down, and we sow millet among the plastic. That breaks the rain onto the plastic, shades it, and holds the soil and structure in place."
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Even so, access to fields was limited. "We haven't been able to get near it, so we're about three weeks late." Conditions have since improved. "We are in a weather window, 18 to 20 degree nights and 28 to 31 degree days with a breeze, it's absolutely perfect growing conditions."
The crop is still developing, but prospects are positive. "Plants are looking really good," he says, with harvest now expected to run from June through to December. So Jackson might benefit from low supply, but he's not going to be the only grower that hits the market late. "It's a real double-edged sword. Sometimes the price spikes because of low supply, then suddenly everyone plants, and you get a crunch in the market where it falls below cost."
Against that backdrop, the domestic market offers more control. "We have a very good brand reputation on watermelon, and ours are amongst the top-eating watermelons," Jackson says. "When people want what you've got, and they'll pay a little bit more, that sometimes is enough to get us through." By contrast, export pricing remains fixed and inflexible. "I've got a dedicated price, and that price has got to carry me all the way through the next year."
For more information
Shaun Jackson
Daintree Fresh
Phone: +61 418 743 876
www.daintreefresh.com.au
