New Zealand Avocado Oil Permeates Australia

Value Added Avocado

Fruits

Mexico

Published Feb 14, 2020

Australia has been importing avocado oil from New Zealand in its major avocado-producing region. The drop in avocado oil production is due to avocado producers being less incentivized to produce oils than selling it in raw form or as guacamole.

The price of avocado oil is high following a global shortage of avocados. Queensland, a major avocado-producing region in Australia has opted to import oil from New Zealand due to a shortage of cheap avocados available for processing into oil.

New Zealand is a growing producer of avocados of the Hass variety and is increasingly gaining prominence for its avocado oil as well. Australia is New Zealand’s biggest customer of the fruit, accounting for 80% of exports in 2018, as well as being a significant customer of its oil.

Australia Imports Avocado Oil from New Zealand

Producers of edible oils in Queensland, where more than half of the Australian avocados are grown, no longer produce avocado oil and instead import it directly from New Zealand. This came after Australian manufacturers were not able to source enough avocados at a low enough price to produce avocado oil.

Avocados are produced year-round and thus certain olive oil processing facilities in New Zealand produce olive oil during olive harvest season and avocado oil the rest of the time, allowing them to maintain lower production costs. Additionally, the country is a worldwide pioneer of the cold-pressed method of producing oils which allows its products to maintain its nutrients.

Guacamole the Cause for the Ruckus

Australian producers, on the other hand, have not been incentivized enough to pay for the manufacturing costs and sell the product in oil form, as opposed to other processed forms or selling it raw.

This is an interesting phenomenon as Australia has not experienced declines in overall production. Production is even expected to increase by 11% during the 2018/2019 season and is expected to grow by at least 115K tons by 2025.

The cause of Australia’s oil production decline is guacamole. This is an issue that pertains to other parts of the world as well, as major guacamole companies are offering bigger payments for avocados than avocado oil producers. In Mexico, exports of processed avocados mainly consist of puree and guacamole, as other processed styles require high-cost processing equipment. This has slowed down the production of avocado oil and caused a worldwide shortage, skyrocketing the demand.

Nevertheless, the avocado oil market was valued at USD 440 million in 2018 and is expected to rise to USD 736.3 million by 2026. Thus the market is expected to become more profitable in the future for countries that are able to overcome manufacturing costs, such as New Zealand.

Outlook for Entering the Australian Market

New Zealand faces some competition, however, as top avocado producers such as Mexico, Peru, and Chile are threatening New Zealand’s exclusive access into Australia. While Mexico mainly exports the fruit in its raw form, its unmatchable status as the number one exporter accounting for 40% of worldwide avocado exports has made the country the third-largest exporter of oil as well.

For the time being, however, New Zealand remains as Australia’s main source of both the fruit and its oil due to its stability and geographic proximity. Additionally, due to higher biosafety standards of exporting to the Australian market, it is harder for newcomers to readily gain access. Demand for New Zealand avocado oil has even seen a rise in 2019 as the avocado industry saw a higher percentage of high-quality avocados that enabled pre-season estimates to triple.