Avocado Supply in Australia Outweighs the Demand

Published 2022년 6월 23일

The Australian avocado market has reached a 15-year low with prices per avocado of less than USD 0.70 due to a massive oversupply. The oversupply and low prices are having producers dispose of avocados since it is cheaper than trying to sell them. It is forecasted that avocado production will keep increasing and reach 170K metric tons in 2026.

Australia is facing an oversupply of avocados, threatening the industry. The supply of Australian avocados outweighs demand tremendously, causing a price drop. The Australian avocado market has reached a 15-year low with prices per avocado of less than USD 0.70. Last season, a 400kg container was sold for over USD 2K, while this season it is selling at USD 450. The low prices are not covering the production costs, and avocado is becoming an unprofitable product in Australia.

The avocado oversupply in Australia occurs because of the 147.9% increase in avocado production over the past decade since hundreds of new avocado trees were planted and are currently reaching a productive state. Far North Queensland used to supply about two-thirds of Australian avocados, but the harvest in Western Australia has surged, causing an oversupply nationwide. In 2021, the production increase was influenced by good weather in Western Australia. The total avocado production in Australia reached 90K metric tons in 2021, and production is forecast to reach 170K by 2026 since new orchards are still being planted.

Source: Tridge, Avocados Australia, ABC Australia

Despite avocado prices dropping, local consumption has not matched the increase despite requests from producers. About 80% of Australian households consume avocados, with a per capita consumption of 4kg in 2021, but it is necessary that per capita consumption increases to 5-6kg to alleviate the avocado oversupply. The Australian market cannot absorb the increase in the avocado production volume, making opening new markets necessary.

Australian producers are looking to open markets in India and Thailand and expand the already existing markets in Singapore, Malaysia, and Hong Kong. Australia recently gained access to the Japanese markets. Unfortunately, the east coast avocado growers cannot export to Japan due to the presence of fruit flies in Queensland. Producers and exporters follow a strict biosecurity protocol called “conditional non-host” to enter the Japanese market. This protocol requires the harvest of avocados before it ripens, cold storing, and specific packaging. When avocado harvest occurs before ripening, the fruit is not susceptible to fruit flies. If Queensland does not follow the protocol, Australia could only supply avocados to Japan for half of the year, but the country can cover the 12 months if Queensland adapts and exports to Japan.

The opening of new markets plus the expected decrease in production output during the spring and summer months in Australia will help reduce the oversupply. Currently, many producers are disposing of their oversupply since it is less expensive than trying to sell it. The overstock of avocados includes premium/high-quality avocados, so the second-grade and low-quality fruit that is not worth the cost of packaging and trying to sell is disposed of. Australian growers are focusing on producing premium quality fruit to become a strong player in the global market, but floods in Sydney and Queensland are disrupting the quality of avocados.

It is necessary that the industry recovers and allocates its supply. The local market cannot absorb the production growth, meaning opening export markets is essential to fight the oversupply and low prices. Only by increasing exports, avocado production will become profitable again for Australian farmers.