Avocados are likely to stay cheap for years, but farmers are getting smashed

Once considered a luxury purchase, avocados have stayed relatively cheap throughout the cost-of-living crisis and are likely to stay that way. 

A record-breaking 139,000 tonnes of fruit will be grown this year, with that number set to keep rising for the next five years. 

But while consumers may cheer, farmers are contemplating their futures, as thousands of hectares of trees start to bear fruit, potentially creating an oversupply.

They are now pinning their hopes on new markets, including one that has proven to be lucrative — but problematic. 

An avo-lanche of fruit

It started during COVID-19 shutdowns, when restaurants and cafes closed and were no longer taking second-grade avocadoes for their breakfast menus.  

Around the country, videos and photos emerged of growers dumping their produce because no one would buy it.   

But even when brunch spots reopened as lockdowns ended, the glut did not end.

In 2020/2021, just over 78,000 tonnes of avocadoes were grown.

The following year, that figure jumped by 56 per cent to 122,197 tonnes, worth $403 million.

It dropped slightly in 2022/2023, but the 2023/2024 crop was expected to be up by 20 per cent year-on-year, which Rabobank analyst Pia Piggott said was due to 1,500 hectares of plantings coming online. 

“In Western Australia they produce avocados with alternate bearing, so some years are lighter, and some years are heavier,” she said. 

“This year we had a really big year.”

While that may pale in comparison to top producer Mexico’s forecast 2.5 million tonnes, for Australian producers it signifies a saturation point for the domestic market. 

Australians each consume about 4.43 kilograms of avocados a year, but Ms Piggott said it was not enough to help local farmers.

“In Australia, demand is pretty stable on a per capita basis,” she said.

“It’s still really high compared to many other countries — not far behind the likes of Mexico.

“But that’s definitely something that’s going to have to continue to grow because our exports aren’t going to be able to grow at that same pace.”

She said Australia had reached a record high for avocado production, and there was another 4,000 hectares set to come into production over the next five years. 

New markets

Hong Kong, Singapore, and Malaysia are key avocado export markets for Australian growers.

However, Ms Piggot said they were facing the same saturation issue there.  

“There’s not as much growth potential … because Australian avocados make up the majority of avocados sold in those destinations,” she said.

But there have been positive signs of interest from other countries.

Industry group Avocados Australia has been working to open up new markets, with India, Japan and Thailand proving fruitful.

But chief executive officer John Tyas said these markets would take time to develop, even with the Indian free trade agreement in place. 

“India market access is a great opportunity, however, we have much to learn about this market,” he said. 

“It will take time and effort to develop this market over the coming years.”

Huge potential in China

China is another potential market, but there are barriers to be overcome there too.

“We know that the Chinese desperately want Australian avocados,” Mr Tyas said.  

“We just need to get through the process of the protocol negotiation.”

He has been pushing for the fruit to be included in current market access negotiations for Australian apples and blueberries to be sent to China, with Chinese kiwifruit and jujubes heading to Australia in exchange.

But while the Chinese market is large, it is not without risk. 

Four years ago, Beijing imposed tariffs on several Australian commodities creating a trade war.

From 2023, trade resumed for coal, barley, timber, and a few meatworks.  

But wine, lobster and some of the country’s largest beef exporters have yet to regain access to what was their most lucrative market. 

Growing interest

Avocado Australia’s representatives have visited China, and a group of growers and exporters are also set to travel there in August to better understand the market.

It follows a recent visit by Chinese importing company Riverking to avocado farms in Queensland, including a farm run by Lachlan Donovan in the Bundaberg region, 350 kilometres north of Brisbane.

“It’s vitally important for the Australian industry to keep on opening up these export markets,” Mr Donovan said. 

Currently 90 per cent of Australia’s crop is eaten domestically, and the price has stabilised from unsustainable lows.

But Mr Donovan said many growers were preparing for exports to become a more significant part of their operations. 

“It should be fantastic for the industry … you’ve got 1.4 billion people there [in China],” he said. 

“Their consumption is rapidly rising — I think it’s only at 60,000 tonne last year, but it’s going up every year. 

“There’s plenty of opportunity if we do get access.”