The damp start to picking of SA avos has reduced crop expectations to below the 10.5 million 4kg cartons forecast in FPJ last month by the South African Avocado Growers’ Association (SAAGA), but it is worth repeating now that chairman, Westfalia’s Claus Lippert, did say at the time that the figure “is likely to be at the very top-end of the scale”.
Lippert’s crystal ball was working, but the rain has delayed things rather than drastically reducing volume. “Sendings will probably be a little lower, due to stricter packing, but I wouldn’t expect too much of a change in major markets,” he says. “At the end of week 15 last season, we had sold 7.1 per cent of our crop, this year it is 6.4 per cent of the projected volume, so we are not too far behind.”
Afrupro’s Grant Blanden says the river in his family’s game reserve has overflowed for the first time since 1872, and the rain has had a significant impact on picking early fruit. “The greenskins that we have picked have been very hard and clean, which is always a good sign,” he says. “The problem is that fruit becomes a bit more susceptible to injury and damage and therefore it is up to the industry to be careful to tie down quality in the packhouse and ensure shipping temperatures are right.”
Bryan Anderson, md of HL Hall’s UK operation in Paddock Wood, says: “Now the rain has cleared up it’s all hands on deck - there is a lot of activity and even though we’ve had a slow start, the market is very bullish. Prices are strong for greenskins and I can’t see any reason why that won’t remain throughout the season.”
Having said that, Anderson was not alone in voicing his concerns that additional volume from Peru could cause a costly imbalance in the Hass market later in the campaign. Forecasts suggest that as much as seven million cartons of Hass could come out of the Latin American country - compared to just 3m cartons last season. “Unless it is planned in effectively, it could have a detrimental effect on the market,” says Anderson. “It doesn’t take too much extra produce in the market to create an imbalance, particularly when it is being shipped from a long distance.”
The challenge, says Lippert, is to “better co-ordinate the information flow between producing nations and maintain the balance of product in the marketplace.” Co-operation and information sharing between avocado producing nations has been stepped up, with SAAGA at the forefront of negotiations. “The momentum is building for the avo industry. The level of information we are sharing is more detailed and accurate,” says SAAGA’s general manager Derek Donkin. “It helps planning. We are not acting as a cartel, but we can better co-ordinate the volume of avocados moving around key markets.”
However, individual exporters are still free of course to make their own decisions. “With the information we have, we would expect a very good start to the season,” says Donkin. “Sendings will peak at around 1m cartons a week, but that is lower than last year and the strength of the market should hold out. We are confident that our promotional campaign in the UK will create increased demand and therefore the market would cope with any additional volume.”
Lippert admits that avocados have largely escaped the swathes of price-cutting as they have hung onto their position on the mainstream fringes in recent years. Anderson hopes to see “sensible pricing” applied to the category for some time to come. “It would be very nice to have a price that enables the consumer to purchase a fairly-priced product and for all the players in the chain to get a fair margin. It is very important that the grower gets a good return if the progress we have made is to continue,” he adds.
Blanden reports “crazy prices” being demanded for Spanish product in the last fortnight, with an early end to Israel combined with the SA delay leading exporters in Spain to ask as high as €11.50 a carton, at a time when €8.50 might be the norm. “The Spanish are really putting the screws on and we have been losing money hand over fist,” he says. “Hass availability is still three weeks away and people don’t have much alternative to greenskins at the moment. Hopefully, though, the market will stay strong for SA fruit.”
Anderson says suppliers need to be careful about the pricing of their fruit. “There could be a lot of pressure on prices this year. As avocados become more of a commodity, people will begin to treat them as such. The first has held onto its exotic status for a long time, but it is moving into the mainstream and perhaps that’s where the prices should be pitched.”
There is not much slack at grower level, says Blanden, particularly in view of the strengthening of the Rand. “The SA Rand is at 10.60 to the pound, compared with around 12.20 a year ago. Last season it averaged out at 11.80 across the season, which meant that break even for growers was around £2.90 a carton,” he says. “This season, that has risen, through no fault of the grower, to a minimum of £3.20 a carton. Everyone is feeling it and it is by no means unique to the avocado industry, but it is the reality.”
He says that the industry has to evaluate its options. “I would rather we do other things with our products than simply discount them. The local market in South Africa is developing strongly, which takes a lot of pressure off - as it reduces the amount of ad-hoc fruit that would otherwise find its way onto the UK marketplace,” says Blanden.
Around 80 per cent of SA avocados are now exported through producer-oriented groups. “That brings in greater discipline and eradicates the opportunistic approach to marketing,” Lippert says.
SAAGA’s Derek Donkin adds: “What is good for the exporter is good for the grower - they are one and the same in most cases and that has allowed the industry to mature in its understanding of international customer requirements.”
“A lot of the mobile phone and fax brigade of exporters have disappeared now as producers have realised that gaining access to reliable programmes and customers is crucial to their long-term security,” says Lippert. “Our currency is strong and because exporters are production-based, they have made a lot of effort to look at the supply chain and take out any activity that does not add value to the product. Every angle to bring down logistics costs and reduce transit times has been explored, even though we tend to land our fruit fresher than our competitors in South America.”
Through Food South Africa, established in 2005, various sectors of the country’s food industry are combining with the Government to enhance the competitiveness of SA’s industry in international markets. For nine years though, SAAGA has had a permanent representative in Europe, whose task is to monitor quality of fruit arriving in the continent and address any issues that arise, as well as, for example, feeding back advice and information on the effect of picking schedules and temperature regimes on avo performance in transit.
“This has been really useful,” says Lippert. “We have been trying new CA technology, such as SmartFresh, and it is important to have an independent evaluation in Rotterdam. It is an unbiased view which is available to the whole industry, and the fact that SAAGA has access to all importers’ facilities shows the trust and appreciation that exists for the role.”
Some 52 per cent of South African avocados available this year will be green-skinned fruit, with Fuerte accounting for around 60 per cent of that. Hass makes up the non-greenskin crop and volumes of the UK retailers’ favourite continue to build. “There is an increase in Hass plantings, but it is being done sensibly, and only in areas suitable for growing the variety. I certainly don’t foresee a time when there will be no greenskins and SAAGA is constantly involved in research projects searching for promising new cultivars and ensuring that SA growers have access to the best genetic material available,” says Lippert.
The growth in ripe & ready to eat sendings is also strong and over a third of all South African avocados will be exported in this format in 2006. “Ripe & ready to eat avocados are an entry point for many first time avocado consumers,” says Donkin, who adds that, although still niche sectors, the organic and Fairtrade avocado markets are expanding. “Although organic farms are still in the minority, there has been a strong move in South Africa towards the inclusion of more environmentally friendly farming methods,” he adds.
There are two meetings of the international avocado fraternity each year, at which all major producing nations outline any promotional plans, as well sharing production data. The co-operation is also moving into generic promotion, as the UK saw last year with Chile’s first ever avocado campaign in the market. France has experienced a Mexican avo promotional programme and this season, South Africa and Peru will also be combining on a PR campaign in France. “If we can’t promote avos collectively, then the plan is be complementary. Even if some countries are still more interested in promoting origin, we all have to recognise that it is still good to be promoting avocados,” Lippert says.
SAAGA has been extremely successful in the UK, where its promotional efforts have just entered their 12th year. During 10 of those years, SAAGA has pushed the proposition “Summer avocados: Fresh from the South African Sun”.
“Our consistent marketing, promotion and consumer PR campaign has been very successful and has seen household penetration levels increase substantially,” says Lippert. “1.8 million more new consumers regularly enjoyed avocados in 2005. In 2000 household penetration was 16 per cent, by 2003 it had risen to 18.1 per cent and last year it reached 23.8 per cent.”
For the first time this year, the campaign will also focus on using avocados as a beauty product, including face and hair masks. A new piece of consumer literature is being produced and will be promoted to consumers and the media. The new booklet will be introduced by Nicky Hambleton-Jones, star of the hit TV series 10 Years Younger.
The UK consumer website - www.summeravocados.com - will also be given a revamp this season to reflect the new booklet design. The website will be promoted in all promotions activity for Summer Avocados.
And at the height of the season, July will be ‘Summer Avocado Month’ and will be a major focus for this year’s promotional programme involving radio campaigns, regional press activity and national women’s media.
FPJ will be visiting the principal South African avocado production zone in May.
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