On the next episode, screening 16 July 2017 at 7pm on TVNZ 1:
Te Puke orchardist Ron Bailey started planting avocado trees in the 1970s and since then he’s seen the industry go through huge ups and downs. Back then, growers were getting $100 a tray, but in 2011 it was just $7 a tray.
That year, grower income equalled the cost of production and there was zero profit for Ron’s family to live off.
But Ron is not one to sit back and take what gets dished out. At the first avocado growers meeting he went to, he was elected chairman and he’s been actively promoting the industry ever since.
In his eyes, the problem was simple – exporters were competing with each other for market share and driving the price down. Australia is New Zealand’s biggest market – it takes 80% of the New Zealand export crop. But Australian supermarkets are hard-nosed operators and they seized the opportunity to set New Zealand’s exporters against each other.
“When you get 13 exporters competing with each other for market share in the wholesale markets and into the supermarkets, it’s a great opportunity for the buyers to wind the price down by playing one exporter off against the other,” Ron says.
“Our guys were so keen to get market share that they would drop the price 50 cents or a dollar and at the end of the day or a week, the price could be wound down by several dollars a tray.”
A model already existed to solve the problem. The dairy industry had Fonterra and the kiwifruit industry had Zespri – large companies with the money to promote their products to overseas consumers and the muscle to secure the best deals.
Growers like Ron Bailey and avocado exporters like Ted Thomas decided something had to be done.
Five years ago the two largest exporters, Primor Produce and Southern Produce, got together to talk. Ted Thomas of Primor says: “We asked ourselves how could we do a better job for growers and how could we do a better job for our customers offshore?”
The two companies agreed to cooperate instead of competing and formed a new company, Avoco. “It’s been a huge success in terms of being able to manage the needs of our growers,” Ted says.
Ron Bailey says: “This year, compared with 2011 when we got $7 a tray, we’re looking at three times that sort of money as a return to the growers.
“We’ve got enough issues to battle with, such as weather and pests and diseases, and so if we can reduce or minimize the risk in the market place, that’s great.”
He says a new confidence has spilled over into the whole industry. “The harvesting contractors, pack-house operators, truck drivers are all prepared to invest in machinery and plant and resources,” he says. “I think we’ve stepped up to being a proper industry.”
Avocados are New Zealand’s third-biggest horticulture crop, behind kiwifruit and apples. They earn $160 million a year in export revenue.
For more about Ron Bailey’s orchard, visit:www.bayfarms.net.nz
For more about The New Zealand Avocado Company, visit:www.avoco.co.nz
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