The Costa Group ((CGC)) has offered a disappointing outlook for the remainder of 2021; unfortunately, problems encountered in the agricultural industry throughout the pandemic are coming to a head. Labour shortages for mushroom production have been pronounced amid a bumper supply-driven weakness in avocado prices.
Costa Group has managed to secure sufficient labor to cover its citrus requirements and main berry harvest at Corindi for the second half, but mushroom production remains disrupted at Monarto.
Production is expected to recover once labor requirements are met although shortages are unlikely to be fully resolved until borders reopen. Reduced winter labor requirements (in Australia) may help in the second half.
Despite the clear evidence of a strong recovery in produce, the earnings guidance provided at the company's AGM now implies a contraction in that segment and operating earnings are now expected to be only slightly ahead in 2021.
On the positive side, harvests in Morocco and China are progressing well and there has been strong pricing and demand over the season. Volumes in China are now finishing in line with expectations while Morocco has performed well despite increased costs.