Week 45

With export packing now in full swing we are starting to see the first indication of a wave of small fruit heading our way.

Larger sizes remain in strong demand; the value within the market is most definitely being driven from size 28 and larger.

Recent NZ Avocado weekly monitoring of packed data has shown a lift in class 2 volumes although not to any concerning level. It is the size profile within the weekly volume that is the critical issue. What concerns us is the volume of small fruit entering the market with no predetermined destination. This fruit is being priced at levels that are below sensible commercial value.

The consequence is that the pricing of smaller sized fruit is impacting larger fruit returns because the gap has become too significant. Consumers preferring larger-size premium fruit are now focusing on the value variation. To stress this point, a sign on the roadside offering avocados at 99 cents per piece (without reference to size or quality) is very enticing compared to the retail shelf at the local supermarket pricing large fruit at $2.99 per piece.

Currently we are restricting fruit volumes to specific markets as a result of the above size predicament. Selling fruit to achieve a commission as opposed to ensuring a solid return is not a model that bodes well for sustainable grower profitability.

Our pricing model shows that CSD returns on sizes 16 to 28 are still very good although we have noted a recent reduction as you will see from the below prices. Size 30 and smaller are under real pressure.