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NZ avocado industry expects price drops as key Australian market is overflowing

New Zealand’s avocado industry needs to brace itself for a period of lower prices and volatility ahead as its key Australian market is swamped with the fashionable fruit, and returns from its emerging Asian market lag behind. Increased Australian production resulted in a deluge of avocados last year which saw retail prices for the fruit fall to a record low A$1 and prices this year are 47% below the five-year average.

Rabobank associate analyst Pia Piggott: “It's simple supply and demand - as the supply goes up, the price goes down.” Strong demand for the heavily promoted “superfood” which features in dishes such as smashed avocado, has prompted Australian farmers to plant more than 1000 hectares a year and after six years those trees are now coming to maturity, which is expected to see Australia’s production expand by more than 40% over the next four years.

Avocado was the first fresh fruit to receive funding under MPI’s Primary Growth Partnership (PGP) scheme through the New Zealand Avocados Go Global program. Established by the National Party in the 2009 budget, the PGP program aimed to boost primary sector growth and innovation through government and industry co-investment.

Under the Go Global program, MPI in June 2014 agreed to give the Avocado Industry Council $4.28m over five years. The industry committed to matching investment of $2.93m in cash and $1.35m of in-kind contributions, taking the total value of the program to $8.56m.

It was extended in 2019 to $11.4m in value over seven years to June 2021, taking total government funding to $5.4m, and industry investment to $5.96m - $3.96m in cash and $2m in-kind. The program was later extended a further 18 months out to the end of 2022 due to the impact of Covid-19.


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