During the Global Avocado Congress, Roger Armitage of Halls spoke about the challenges facing the company in 2022 and future growth opportunities
We are now halfway through 2022. How has the year panned out for Halls so far?
Roger Armitage: It has been a challenging year on a number of fronts. There is an increasingly variable climate and we have experienced unprecedented hail in the Tzaneen area and quite widely across some of our sourcing areas, which has reduced our volumes and packout.
We have also had an intense margin squeeze, caused by downwards pressure on our gross selling prices both locally and internationally in Europe as well as rampant inflation on our farming input costs. International selling prices have been destabilised by the Russia-Ukraine war. A lot of fruit has been held back in South Africa which has depressed our local market prices.
Add in the rapid escalation of energy costs and the growing costs of transporting and shipping fruit – it hits the bottom line, so on-farm returns have been pressured.
It seems you are facing a myriad of challenges this year. What positives have you been able to take?
RA: Looking for the silver lining, we have seen some very high-quality fruit, which has been great, and the challenges have forced us to get much closer to our growers and producers. This helps us to understand exactly what their particular needs are, and to craft a marketing strategy that is going to maximise their on-farm returns.
How is the local market performing and how is it shaped by what you do internationally?
RA: The domestic market is important and it is growing. The sector has been growing at approximately 900ha per annum. About 45 per cent of our production is exported, 45 per cent is consumer locally as fresh and then 10 per cent goes to processing. Exports play a really important role in shaping our market. One of the key factors that will drive growth in the future is going to be market access. That means market applications being successful in China, Japan, India and in the US.
From a grower point of view, Halls is going to have to make sure that any expansion is done to put us at the forefront of global competitiveness, and that our average cost of production is competitive too, against South America or Europe.
What helps South African avocados stand out from the crowd?
RA: South Africa’s unique selling point has always been quality. We produce really good quality avocados, it’s a beautiful product. The experience that this industry has developed over many years in making sure that we deliver a quality product to our international markets has always served us in good stead, particularly on the retail shelves of Europe.
We have to continue to do this to be able to compete internationally, particularly given the growing volumes coming from certain areas like South America.
This is an excerpt from the full interview shown during the Global Avocado Congress
