Financial Factors
Revenue
Table 3 shows the estimated value of these crops on the export and domestic markets.
Avocado export revenue of around $13.50/tray (5.5 kg) at the orchard gate was typical for the 2002/03 season. The major markets are the United States (US) during the late New Zealand winter and spring, and Australia during the New Zealand summer. Prices in Australia were lower in the second half of the season. Management of New Zealand's fruit supply was a factor.
Supply of fruit from New Zealand during early January was limited by few packhouses working through the Christmas/New Year period. Returns were very high due to the limited fruit supply as the domestic Australian crop was between varieties. Packhouses then rushed to supply fruit resulting in oversupply and lower prices during mid to late summer. This was in contrast to the 2001/02 season when the aftermath of 11 September markedly reduced demand for avocados in the US. Close co-ordination of fruit supply to Australia by the New Zealand industry following 11 September resulted in a very successful 2001/02 season for New Zealand avocados in Australia.
The multi-exporter industry is conscious that it needs to co-ordinate marketing to maximise returns and avoid the volatility that occurred this season. The 2002/03 crop volume was below estimates and this may have influenced fruit supply management.
Looking ahead to sales of avocados during 2003/04, the rising value of the New Zealand dollar against the US dollar will have a negative influence on returns. The prospect of lower returns from the US market makes the industry more aware of costs, like tariffs applied to New Zealand fruit but not to Chilean fruit sold in the US.
For citrus, more informed growers and tighter grading standards have improved the standard of fruit on the local market over the last 3-4 years. In addition, increasing volumes of export mandarins and oranges have meant that the local market is not flooded at peak harvest times. These trends have stabilised prices. Average orchard gate citrus returns on the domestic market for 2002/03 ranged from $0.50/kg for oranges to $1.00/kg for mandarins.
Average persimmon returns in 2002 were around $14/tray. This season, returns for the high value, early season fruit are about 10% lower. Growers say that this is due to exchange rate movements and stronger competition from Australian fruit on export markets.
Around 3% of feijoa production is exported, particularly to the west coast of the US. Prices for the 2003 crop were about 15% below 2002 levels due mainly to market conditions. Exports to Australia are being developed. The demand for process grade feijoas is high, particularly for organic fruit.
Tamarillo growers concentrate on the domestic market. Only around 85 tonnes are exported due to low export packout and the high cost of preparing fruit for export. Prices for the first fruit harvested have been good, although peak production will not be reached until July or August. Around $3/kg is a typical average revenue at the orchard gate over the whole season.
Table 3: Estimated Sales Value of Subtropical Crops ($ million)
Crop |
Domestic (orchard |
Export (FOB) |
Avocado |
8.3 |
28.2 |
Citrus |
24.0 |
10.3 |
Persimmon |
0.4 |
10.5 |
Feijoa |
1.2 |
0.3 |
Tamarillo |
1.3 |
0.8 |
Passionfruit |
n/a |
0.4 |
Source: HortResearch (sector estimates, Statistics New Zealand)
Expenditure
Avocado growers focus their spending on the production-related activities of fertiliser, mulch, and pest and disease control. There are no great seasonal spending trends at present. Over the past few years, spending has increased with more attention to detail on tree management and health. More growers are now pruning trees to maintain production and limit tree size. Use of pest monitoring to guide pest control activities is now widely practiced.
Feijoa growers report a yield and quality response to more intensive tree pruning over the growing season.
Net Result
Table 4 provides gross margins for subtropical crops. The gross margin is the annual crop revenue less the direct growing costs, and is a basic means to compare crops. All these crops have a great deal of variation in gross margin between growers, particularly due to different yields. For the short-lived crops of tamarillos and passionfruit the gross margin represents the peak producing years. For avocados, citrus, persimmons and feijoas the gross margin is when the crop is mature. For citrus, where the individual types have different production and returns, gross margins for mandarins, one of the higher value types, and oranges are shown.
The gross margin does not show the different profitability between different crops over their life span as it excludes establishment costs, the time lag until production and expected life span which all vary greatly. These figures are for one hectare. However, typical orchard sizes vary and many growers of these crops have less than one hectare. This reflects a range of issues, such as part-time growers, large variations in profitability, meeting peak labour demands for family businesses, limited industry scale, and land issues (such as values, microclimates and competing land uses).
There is an enormous variation in financial performance between different avocado orchards. Yield, export packout and fruit size are the key influences. Some orchards have warmer sites that were less affected by the cold 2002 spring.
The mandarin gross margin is highly dependent on fruit achieving the necessary sugar levels early enough in the season to catch the high priced period on the Japanese market. This is dependent on seasonal factors, location of the orchard and management techniques used by the grower.
Persimmon packout and yield is very variable from orchard to orchard, depending on the yield and export packout achieved.
Passionfruit is described as a crop with extreme variation in performance. Orchard location is important with warmth and shelter key site attributes. The best yields are in the first two crops, with production beginning around 18 months from planting.
Table 4: Gross Margins for Subtropical Crops ($/ha)
Crop |
Gross Margin |
Crop |
Gross Margin | |
Avocados |
11,850 |
Feijoas |
13,550 | |
Mandarins |
20,100 |
Tamarillos |
16,700 | |
Oranges |
12,300 |
Passionfruit |
12,500 | |
Persimmons |
16,900 |
Source: Agriculture New Zealand Ltd
Contact for Enquiries
Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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