With Australian and New Zealand topfruit growers at loggerheads about the proposed importation of apples from New Zealand to Australia, it is somewhat surprising that both industries have formed a unique fruit assessment and commercialisation organisation to access New Zealand’s topfruit varieties.
Pipfruit NZ Ltd chairman, Phil Alison, is excited about the new arrangement and says: “The New Zealand-Australia company will have exclusive access to the varieties developed by HortResearch. The current programme has some unique varieties ripe for trademarking and private sale, with around 25 new top-fruit varieties ready to go.”
Garry Langford, national co-ordinator for the Australian Pome Fruit Improvement Program Ltd says: “This is a tremendous opportunity for Australian growers to be part of the first fully integrated and commercially focused variety management business in the world.
“In a world where apple production is expanding faster than world population growth it is clear we cannot go on doing the things we have always done if we think that we are going to be profitable,” says Langford.
The new company - yet to be named - will manage all aspects of the varietal development program.
Australia grows around 326,000 tonnes of apples per year, and New Zealand averages just under 550,000t. With a larger domestic market, Australia exports only 36,500t - most of that heads towards the bulk markets of Asia (in excess of 60 per cent of total exports), and around 30 per cent to the EU - consisting primarily of Pink Lady apples.
Australia’s apple varieties are predominately made up of Red Delicious and Granny Smith, which account for over 55 per cent of production. Following on is Gala, Fuji, Cripps Pink , Pink Lady and Cripps Red (Sundowner). However the steady increase in plantings of Cripps Pink and Gala has been to the detriment of Red and Golden Delicious. There are also stable plantings of Braeburn and Jonagold, with little sign of an increase.
Granny Smith plantings remain strong as growers try to deflect the pressure from the red apple market. This variety remains popular with growers as it commands high packouts and has seen a steady positive return.
There have been few new varietal plantings in Australia, with little in the way of commercial sized plantings. Some recent interest has been displayed in Cameo and the New Zealand variety Jazz.
The department of agriculture in Western Australia is about to commercialise a new “pink” variety (ST 23-74). There is also a chance seedling variety, Crimson Snow, from the south east coast of Australia, which has sought after attributes including a pink stripe and ripens 10 days earlier than Cripps Pink. However despite initial interest, it has been slow to establish commercial plantings.
Australian growers are price sensitive, and if the domestic market maintains consistently high prices then growers will sacrifice export opportunities for a short-term higher price. This is not good news for UK importers who aim to develop long-term trading relationships with producers.
“Some Australian growers are struggling to make ends meet, so must be opportunists in determining annually which markets they support,” says Jon Durham, managing director of Apple and Pear Australia Ltd (APAL).
“This year there is a light crop in Australia so domestic prices are strong. The growers who are larger and perhaps better off financially have continued supporting export markets to maintain the relationship.”
Australia is a high cost country, particularly in relation to labour, making it difficult to compete against countries such as South Africa and Chile in the UK Pink Lady apple market. The price difference in labour is the equivalent to around £8 per box. However with expertise, infrastructure and quality logistics, Australia is able to deliver a high value apple to consumers worldwide.
Durham says: “Australia must produce a better, more environmentally sustainable and acceptable product, based on colour, taste, visuals and the background environment in order to remain in the market.”
In contrast New Zealand’s small domestic market with a population of less than 4m (Australia is in the vicinity of 20m), has ensured the industry has a strong export focus with over 360,000t of apples exported each year - the EU is the major export market of around 65 per cent of overall exports.
New Zealand does however have a more condensed list of varieties in comparison to Australia, producing mainly Braeburn and Gala apples. Jazz has made an impact and the industry predicts there will be over 800,000 trees by 2005. Gala remains a favourite for New Zealand growers, while Cripps Pink plantings remain stagnant. The industry continues to hold interest in Granny Smith’s to maintain existing production.
An Enza owned red-blush variety (T22) is also ready for commercialisation.
After years of single-desk selling and poor returns to growers, the New Zealand industry has been reinvigorated through the merger, in 2003, of two large produce companies - Turners and Growers and Enza - to form what has been positioned as a stronger and more efficient export business.
Turners and Growers (the new company has held onto the original name) now sports a global distribution network, joint venture shipping agency, and a handful of international fresh produce brands. With an annual turnover of £220m, it employs 1,400 staff worldwide. Turners and Growers has two European contacts - Worldwide Fruit based in the UK, and Enzafruit Continent in Belgium.
Growers remain optimistic that this new format will reduce selling costs and provide improved returns.
Alison says: “Some growers have gained short-term success based on a 1:5 year ratio, but if growers continue to have a decline in returns, then some are going to have to cut corners to survive.”
“New Zealand apple growers meet the international (EurepGAP and retailer supply criteria) food assurance programs, however there is a cost to achieving a high standard of product.”
And for a country with 92 per cent of top-fruit growers being IFP compliant and 8 per cent organic, maintaining the reputation for good quality fruit in the international market place will not stack-up if growers are seen to be cutting corners.
Retailers have increasing power in trade relations with growers, and the New Zealand apple growers have in particular felt this unbalance of power.
“Retailers have too much power in the supplier-buyer relationship, at some point this power balance needs to be more equal,” says Alison. He cites examples of changing terms of trade and supply requirements which have resulted in lower returns to growers.
If this is the case why do growers not change the relationship? Alison suggests that growers do not complain to the retailers for fear of losing the supply contracts. As chairman of the Industry Association, Alison says it is one of the major problems the industry needs to put right.
Competition in the European and Asian apple markets is increasingly fierce, and the New Zealand industry needs to maintain its market edge with new and more innovative varieties. With a history steeped in growing Gala and Braeburn apples, it is time to step ahead of the competition.
Alison says: “We need to look at new varieties, develop an effective pricing structure, and market attributes as a whole industry to determine where we should be spending our funding on market development. IFP and organic is a growth area and need to be maximised as a marketing point.”
Australia is a market which New Zealand apple producers have been keen to exploit. However the Australians have a tough quarantine program and to-date have prevented the importation of most fresh products because of pest and disease concerns. The New Zealanders have ridiculed the process, saying the Australians are living in a protectionist environment, which is contrary to its role as a member of the CAIRNS trading group.
Alison says: “To have a viable industry you need the opportunity to trade. Australia heads up CAIRNS yet is unwilling to open its own markets to the same trade agreements as it expects from others.”
Australia has been accused of protecting its market on unscientific grounds. “We have fireblight and have learnt to live with it. The same must go for Australia, it is not as bad as has been made out,” says Alison.
Commenting on the issue of New Zealand apples to Australia, Durham says: “Australia is a small market (15m boxes) which looks attractive with a reasonable supply and demand balance. However it won’t take too many boxes from imports - say around 5 million or less - to change the dimensions of the market and see Australian growers suffering.”
Australian growers believe that the New Zealand import case is not a matter of principal but a matter of breaking the trade barriers. To-date, the industry believes that the quarantine process is not safe enough to protect the industry from disease, and there are still unanswerable questions.
“The Australian industry will prevent imports from New Zealand until the answers are satisfactory,” says Durham. “We know that New Zealand apples will bring Erwinia amylovora - fireblight - into Australia, but we don’t know if it can or will move from the imported apples to the environment.”
It has been estimated that a fireblight infestation in the Australian apple industry could result in £400m of damage to the industry in the first six years.
Durham adds: “We live in a global community and the domestic market will be exposed to the international community. The reality is that China is most likely to gain apple exports first, as it currently successfully exports Chinese Ya pears into Australia.”
It will be difficult for Australian apple growers to compete against China for the Australian apple market. To maintain market share, Australian growers will need to gain significant consumer support and rely on accurate product-origin labelling.
New Zealand will continue to push for market access to Australia, as well as pursue access into the Chinese and Japanese apple markets. “We will be pursuing all these market opportunities,” said Alison. Growers will target the profitable top-end market.
However, all is not doom and gloom for Australian and New Zealand apple growers. For many years, the New Zealanders have enjoyed the success of Braeburn and Gala in the UK. There is also the classic success story of the development of the Cripps Pink apple and the unprecedented trademark of Pink Lady apples internationally.
Pink Lady” apples have held appeal to the UK consumer since their introduction some 10 years ago. Recently this was taken a step further with four burly Brits rowing a Pink Lady” boat across the Atlantic Ocean from Canada to Britain.
So what was a pink boat doing in the Atlantic? The International Pink Lady” Alliance aims to maintain and develop a unique product identity, with both a registered product standard and high profile marketing activities. With strong competition from other fruits and the demands of a £2 billion a year snack food industry in the UK, Pink Lady needs continual timely exposure to compete favourably.
The boat stunt across the Atlantic did indeed gain much media coverage. Andy Macdonald, managing director of Coregeo says: “Pink Lady” apples have received more media and internet coverage than any other fruit sponsorship. Seeing the tiny pink boat bobbing up and down the Atlantic created an enormous following and we were fortunate to have all the mainstream media supporting us and providing coverage at every opportunity.”
This is a timely marketing exercise for the 1.4m box a year UK Pink Lady” market as the season began in June with South African Pink Lady apples, crossing over with apples from Australia which run through until December. Northern hemisphere suppliers follow on from December.
Macdonald says of the crop this year: “Production is down slightly from the 2003 season, however the quality is high, and the demand for Pink Lady apples is increasing with retailers continuing to see good sale results.”
Coregeo is a subsidiary of APAL and is charged with promoting all Pink Lady apples in the UK with the aim of increasing the demand. Coregeo works closely with retailers to develop POS material and marketing opportunities.
Asda recently began a 6-week trial program with Pink Lady apples. Instead of selling the registered Pink Lady apples, Asda are selling the variety Cripps Pink. Asda fresh produce buyer, Lee Harper says, “We pay an extra 30 pence to the grower for buying Pink Lady” apples whereas selling the variety Cripps Pink means we can pass that saving onto the customers.”
Asda has in the past sold 9,000 cases of Pink Lady apples per week, equating to weekly sales of over £200,000.
Durham, says: “We are watching the Asda programme closely. Obviously as Pink Lady” royalties come back through to Australian growers we are concerned that this trend could pick up across UK supermarkets.”
“Asda is selling Cripps Pink as pink apples which is taking benefit from the trademark. It seems they are increasing the returns without due support of the growers.”
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