Blueberry oversupply hurts Australian farmers

An oversupply in blueberries that has forced prices down in supermarkets might be a source of joy for consumers but comes at a significant cost for farmers, who say the low prices are unsustainable for ongoing farming operations.

Brackenridge Berries owner and manager Jenny Kompara-Tosio said: "I think that what is happening is that a whole lot more people have gone into business and all those plants have come on line. They're all selling into the market at once and when that happens the price drops dramatically."

Ms Kompara-Tosio said oversupply had caused prices to fall to $2 a punnet and she has seen them for less than that. Oversupply has caused low blueberry prices, which farmers say are unsustainable.

Blueberry farmer Otto Saeck from northern NSW agreed that at these prices his operation became so squeezed it was almost unsustainable. Prices this low barely cover operating costs for farmers, according to Mr Saeck, particularly given that Australia has some of the highest labour costs in the world.

Cheaper blueberries have affected horticultural company Costa Group's profit, with the company notifying shareholders of a profit downgrade on Thursday last week. This caused the Costa share price to plummet 39 per cent in a single day's trade, wiping $900 million of value off the company.

Costa blamed not only blueberries, but "subdued demand" in tomatoes, avocados and other berry varieties as the cause for downgrading to flat growth in net profit after tax for the 12 months ended June 2019. In previous guidance, the company had told investors they were expecting low double-digit growth.

Farmers taking risks
A research note from Macquarie bank said berry prices had been "slightly weaker" for the first half of the 2018-19 financial year. The broker said Costa had expected prices of $3.50 a punnet over December and January but it was seeing prices a dollar lower than that.

Macquarie said high production and lower prices of Victorian Yarra Valley strawberries "likely caused a substitution effect between berries and strawberries in December".

Farmer Mr Saeck told it had been a particularly tough 12 months for blueberry farmers and the low prices had really ramped up over the spring period. "When the price was down was really from August through to November, which was much lower than what it normally is and what most growers expected.”

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