6.11     Avocado

6.11.1 Industry profile

Despite significant new plantings aimed at boosting production, avocado exports have declined to decade lows due to a series of severe climatic events over the past two years.  Orchard Gate Return (OGR) has hit its lowest point on record, declining approximately 70% compared to the historical five-year average. Both international and domestic sales returns have been heavily impacted by uncontrollable international supply dynamics, exacerbating the situation further.

Avocados, a staple commodity in the international market, continue to face challenges despite efforts to expand orchards and increase output. The industry spans more than 4,400 producing hectares, with new investments focusing on larger, more intensively planted orchards, often converted from dairy farms.  With over 1,600 growers, there is a notable diversity in the industry, ranging from very large to very small orchards. The downturn highlights the vulnerability of agricultural supply chains to climate disruptions and global market fluctuations, emphasising the need for adaptive strategies and resilience planning in the avocado industry.  Efforts are underway to mitigate these effects through improved forecasting, reviewing export compliance settings, sustainable growing practices and diversification of export markets to stabilise future avocado trade.

The Crown's investment in the Primary Growth Partnership was instrumental in enabling broad investment across the avocado industry's value chain, enhancing productivity, supply chain systems, and market development. With this initiative now concluded, the industry must capitalise on this investment and explore alternative funding avenues moving forward.

The New Zealand Avocado board has undergone a complete change in members and set strategic objectives focused on developing and maintaining markets, optimising the value of each season's crop, ensuring a strong representative body, and maintaining consistent supply to meet consumer needs.

The outlook for the next avocado season (starting July 2024) appears optimistic following a strong 2023 pollination, which is expected to result in a more ‘normal’ crop yield across New Zealand.  Significant changes in post-harvest operations have occurred, with two packers closing and one not planning to pack in the 2024-25 season. This rationalisation reflects similar adjustments on the supply side, with smaller orchards needing to review their approach. The overall quality of the New Zealand crop is forecasted to improve significantly, leading to more consistent export pack outs and substantially enhancing Orchard Gate Returns (OGR). These developments suggest a potentially stronger market position and improved financial outlook for New Zealand avocado growers in the upcoming season. To support this the Export Marketing Strategy has been revised to provide more trade opportunities and increased exporter coordination into a wider set of markets.

New Zealand Avocado is set to resume its marketing efforts in Asian export markets after a two-year break due to funding. This renewed focus comes as New Zealand marketers brace for heightened competition from Australian supply. Competition is intense, and New Zealand faces significantly higher production costs compared to Central and South America, where the majority of avocados are grown.  Any additional barriers, tariffs, or costs incurred further diminish exporters' ability to deliver returns to growers.

Despite challenges such as increased freight costs and shipping delays in the aftermath of Covid19, the anticipated return to pre-pandemic shipping rates and schedules is expected to support an increase in export volumes. Favourable consumption trends in Asia and North America provide a promising backdrop for New Zealand avocados, which hold a modest 2% share of global production.

This marketing activity is supported by sustainability research, looking at best practice water use, effective agrichemical use, improving canopy management for improved quality and production, and a life cycle assessment study released in late 2022. Economic sustainability for growers is dependent on increasing yields and quality. Productivity has increased slightly with better application of best practice though it remains low across many orchards. The economic sustainability of orchards is dependent on bringing productivity up to a consistent 12-15 tonnes per hectare, or more.

The domestic market worked hard to absorb avocados diverted from export but the fluctuating supply created high volumes, which put downward pressure on value. The improved outlook for export markets this season will hopefully reduce volume pressure on the domestic market. An increased focus from consumers on health and wellness and their versatility has contributed to the growth in New Zealand avocado consumption.

New Zealand Avocado is the industry body representing avocado growers and supports the industry across the value chain from nurseries through to growers, packers, marketers and exporters.  New Zealand Avocado undertakes activities including research and extension, managing export systems, industry biosecurity, resource management and market access to both protect and optimise growers’ investment.

Growers are members of the New Zealand Avocado Growers Association, which has a 100% owned subsidiary New Zealand Avocado Industry Limited, as its operating entity. The association is recognised by the government as representing New Zealand avocado growers. In that recognition comes the requirement that any avocado exporter must be licensed with the New Zealand Horticulture Export Authority (HEA). In 2024, there are nine licensed exporters and 12 registered packers involved in the export of New Zealand avocados. Avocado has been a prescribed product under the HEA since 1989. New Zealand Avocado Industry Limited is the recognised product group, made up of registered growers, packhouses and exporters.

Under the export marketing strategy for avocados, all avocado growers, packers and exporters must comply with mandatory industry food safety, quality and phytosanitary requirements for export. These systems are audited by a third-party independent agency AsureQuality.

6.11.2 Exports

Avocados have declined to become the tenth most valuable horticultural export crop in 2024, falling from fourth in 2018, fifth in 2020, and sixth in 2022. The total value of avocado exports has declined by 53% to be worth $37.5 million in 2024, alongside a 66% decrease in export volume.

Australia remains the main export destination accounting for 39% of total volume exported. In 2024, there was a 67% decrease in value to $14.9 million and a 77% decrease in volume for exports to Australia. The value per tonne of exports to Australia has also decreased from , but has increased by 49% in 2024 to $4,510/tonne.

Exports to all Asian markets (South Korea, Taiwan, Thailand, Hong Kong, China, Japan, India, Singapore, Malaysia) collectively decreased 41% from $35 million in 2022 to $21 million in 2024. Small volumes were exported to Canada, and United Arab Emirates for the first time, and avocados were exported to the USA for the first time in ten years.

Table 6.11.2: Avocado (0804.40.00.01, 0804.40.00.09) export markets 2022-2024 (year ending June, tonnes, $NZ FOB)

6.11.3  Barriers to export

Cost of Tariffs

Australia remains the largest single market for avocados, where there are no tariffs because of CER. Under the New Zealand-Korea FTA, the tariff for avocados decreased to zero in 2024, where previously the tariff was 6% in 2022, decreasing from 12% in 2020. In 2018, the tariff into Japan was removed under CPTPP, as was the tariff into Taiwan under the ANZTEC Agreement.

India imposes a 30% tariff which may be stifling export growth to this market. Tariffs on exports to India now represents 93% of tariff costs which is paid on just 4% of export value. High tariffs are likely to remain as negotiations on a New Zealand-India FTA have stalled. The USA imposes a tariff of 11.2c/kg on avocados, which equates to 4.6% of export value. Tariffs cost each of the 1,600 avocado grower an average of $264.

Table 6.11.3: Cost of avocado tariffs (basesd on 2024 FOB value)

SPS market access barriers

Australia. Australia is New Zealand’s largest export market for avocados.  The offshore pre-shipment inspection (OPI) programme has been replaced by inspection on arrival and the Compliance-Based Intervention Scheme (CBIS) which rewards and applies intervention rates based on importer–supplier compliance. The entire supply chain from orchard to postharvest are implementing measures to better manage avocado pests. However regular pest interceptions remain for egg and juvenile organisms, over 70% of which are mite related, where incomplete pest identification results in precautionary actions being taken on potentially non-actionable pests. In 2024, a MPI Official Assurance Programme was implemented due to detections of leafrollers on avocados and through the 2023-24 season measures were successful in reducing leafroller interceptions to zero.

China. New Zealand gained market access to China in January 2018. Trade to China is under a MPI Official Assurance Programme (OAP), which requires annual grower, packer and exporter registration as well as pest monitoring and management in orchards and through post-harvest measures. New Zealand Avocado is seeking improvements in the export programme to ensure practicality and its alignment with existing industry systems.

India. A high tariff (30%), lengthy transit options and increasing competition from Australian supply has put pressure on New Zealand avocado exports to India. Trade agreements focused on reducing tariffs and more freight options will help to improve returns in what is considered a growing market for avocados.

Thailand. In 2015 there was a trade agreement between New Zealand and Thailand which resulted in enhancements being made to the Thailand Importing Country Phytosanitary Requirements (ICPR). These sought to formalise pest measures at both the orchard and post-harvest level along with a requirement to submit annual grower and packer registers to Thailand. 

USA. Due to its establishment in the USA, Light Brown Apple Moth (LBAM) is no longer a quarantine pest, quarantine regulations are being updated to remove the requirement for a risk management plan for LBAM.

Viet Nam. Viet Nam is seen as a potential new avocado market and a market access prioritisation request was submitted to MPI in 2023 but was unsuccessful. The industry has re-applied for prioritisation onto the MPI work plan in 2024.