Session
Session Five
Five
Competing
Competing in
in aa global
global world:
world: aa
series
series of
of presentations
presentations by
by
AMAPWG
AMAPWG member
member delegates
delegates
New
New Zealand
Zealand and
and Australia
Australia Avocado
Avocado
Grower
’s Conference
’05
Grower’s
Conference’05
20
-22 September
20-22
September 2005
2005
Tauranga
Tauranga,, New
New Zealand
Zealand
The Avocado Industry in
South Africa
Competing in a global market
Introduction
• ±150 000 avocado trees planted
annually in SA
• SA export volumes have
fluctuated between 32 000 &
44 000 tons per annum
• Domestic market & processing
industry have absorbed some of
the volume growth
SA Volumes Exported
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
0
The commercial environment
• Buying power has been concentrated –
takeovers and integration of supermarkets
• Supplier power has been diluted –
deregulation
The Tesco Strategy
Price Virtuous Circle
Lower costs
Lower Prices
Internal
Efficiency
Higher Volume
Tesco
Sainsbury’s Corporate Strategy
•
•
•
Recapture our
quality and
innovation heritage
Differentiated offer
First to Market for
outstanding
Brands and Own
quality
Label products
•
To improve ease and
enjoyment of
shopping at
Sainsbury’s
great
service
faster
simpler
together
•
competitive
cost
•
£200m/yr more
expensive to run as
a business than
Tescos in 2000
Reduce costs
Increasing shareholder returns
Cost analysis of export fruit
Rand / carton (4kg equivalent)
Fixed
10-91
Variable
22-58
Total
33-49
Cost Structures
R & D, 3.19%
Commission Local, 1.94%
Commission Overeas,
10.36%
SAAGA, 1.91%
Picking, 2.62%
Packhouse Overheads,
3.28%
Packing Costs, 12.57%
Production Overheads,
2.87%
Transport, 8.87%
Seafreight, 22.15%
Overseas Cost, 6.99%
Production Costs,
23.25%
Currency Fluctuations
• Strength of Rand - negative impact on returns
• Breakeven price : R33-49
• Impact on the SA grower
Exchange Rate
R8-00 €1-00
R9-00 €1-00
R10-00 €1-00
GSP
€4-19
€3-72
€3-35
M 98
ay
-9
Se 8
p9
Ja 8
n9
M 9
ay
-9
Se 9
p9
Ja 9
n0
M 0
ay
-0
Se 0
p0
Ja 0
nM 01
ay
-0
Se 1
p0
Ja 1
n0
M 2
ay
-0
Se 2
p0
Ja 2
n0
M 3
ay
-0
Se 3
p0
Ja 3
n0
M 4
ay
-0
Se 4
p0
Ja 4
n05
Ja
n
Exchange rates monthly average
since January 1998
18
16
14
12
10
8
6
4
2
0
Year
RAND/USD
RANDS/POUND
RAND/EURO
• Currency issues are likely to have a large
impact on the European avocado market.
• Depreciation of the US Dollar has made
European markets more attractive to
Central and South American exporters.
Production –
cost
efficiency /
productivity
Rootstocks
• Breeding and field testing of
new Phytophthora cinnamomi
tolerant rootstocks
• Resulted in a new generation
of rootstocks
• Brought a new dimension to
rootstock tolerance and
productivity.
Cultivars
• Trend to plant more Hass continues
• Result of market preference in specific EU
countries.
Growth manipulation
• Planting in hedgerows
• Pruning to maintain
tree size
• Increased
mechanization
Composting
• An integrated rootrot control procedure will
include practices that promote root health.
• Adding organic matter to the soil is becoming a
more general activity on many farms.
Logistical
efficiency
Shipping
• Controlled atmosphere (CA) most common post harvest
treatment for SA shipments
• 1-MCP (Smartfresh™) technology
is starting to play a more important
role as an alternative
• Advanced Fresh Air Management
(AFAM plus) might also be a
consideration for the future.
• Breakbulk shipping
Avocado exports from SA
• Consolidation within the industry
• Grower driven export companies playing a
more important role in avocado exports
• More than 75% of the avocado exports
from SA are handled by 4 companies.
• This trend has brought more stability to the
industry.
International interaction
Some of these exporters have been active in
developing relationships with suppliers from
other avocado producing countries to meet
customer needs over a longer period.
Supplier / customer interaction
• More direct involvement
in the market by grower
driven export companies
• Is another dimension
which brings the grower
closer to the customer
• Or the customer closer to
the supply base.
Avocado processing
• Value adding creates a fair
value for factory grade fruit
for SA producers
• SA producers can be more
selective in what they
export or sell in local market
Growth of value added products
in SA
Avocado puree production
3000
2500
Tons
2000
1500
1000
500
0
1998
1999
•
•
•
2000
2001
2002
2003
Yield = 45% of fresh fruit
Total volume used in 2003 = 4290 tons
Total volume used in 2004 = 6160 tons
2004
Avocado oil production
1200
1000
Tons
800
600
400
200
0
2001
•
•
2002
2003
Total fruit used in 2003 = ±10 000 tons
Total fruit used in 2004 = ±12 000 tons
** Factory grade fruit used for puree & oil
2003 = 14 290 tons
2004 = 18 160 tons
2004
Impact of avocado processing
on local market price structures
GROSS SELLING PRICE
R 6,000
Rand / Ton
R 5,000
R 4,000
R 3,000
R 2,000
R 1,000
R0
'91 '92
'93
'94
'95
'96
'97
'98 '99
Period
'00
'01
'02
'03
'04
Market development
• Selling more in existing markets – The UK story
- Create bigger awareness for avocados as a
health product
- Availability of Ripe & Ready to eat avocados
• Develop new markets
- Israel efforts in East Block
countries
Market Access
Research on fruit-fly and false codling moth by
– Citrus Research International
– University of KwaZulu Natal
– Agricultural Research Council
Created the technical base for possible market access
to new markets in the future.
This research is a high priority in the industry.
Volume management
• Growers lost money
over a number of
years due to inability
to balance supply &
demand.
South African Avocado Industry
Exports - 2000
800 000
700 000
Cartons
600 000
500 000
400 000
300 000
200 000
100 000
0
11
13
15
17
19
21
23
25
27
29
Weeks
31
33
35
37
39
41
43
South African Avocado Prices
– 2000
20
Fuerte
15
5
0
714 715 716 717 718 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741
-5
Vessel number
-10
20
Hass
15
BOF (Rand)
BOF (Rand)
10
10
5
0
714 715 716 717 718 719 720 721 722 723 724 725 726 727 728 729 730 731 732 733 734 735 736 737 738 739 740 741
-5
Vessel number
-10
South African Avocado Industry
Exports - 2002
Successful Volume Management
600 000
Cartons
500 000
400 000
300 000
200 000
100 000
0
10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42
Weeks
-10.00
Vessel number
94
4
02
34
0
94
6
Hass
92
4
92
6
02
29
0
92
8
93
0
02
31
0
93
2
93
4
02
33
0
93
6
93
8
94
1
94
0
02
36
0
02
37
0
40.00
91
8
92
0
02
26
0
92
2
91
9
02
25
0
Vessel number
90
6
90
8
91
0
91
2
91
4
02
23
0
91
6
02
24
0
BOF (Rand)
93
6
93
4
93
2
92
6
02
29
0
92
4
91
9
02
25
0
92
2
92
0
02
26
0
91
8
91
6
91
4
02
23
0
91
2
91
0
90
8
90
6
90
4
02
22
3
90
2
89
8
02
16
0
89
6
02
13
0
BOF (Rand)
South African Avocado Prices 2002
70.00
60.00
50.00
Fuerte
30.00
20.00
10.00
0.00
-10.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
International Avocado Marketing and
Promotions Working Group
(AMAPWG)
• The interaction between representatives from
countries supplying the European market played an
important role in bringing at least some stability to
the European avocado market.
Israel, Spain, South Africa,
Kenya, Peru, Mexico, Chile,
Australia, New Zealand and
Argentina are part of this
working group.
November 2001
Malaga - Spain
Historic
Overview
Volumes / Prices
EU Greenskin Supply versus Price 2004
9.0
850
8.0
750
7.0
'000 cartons
6.0
550
5.0
450
4.0
350
3.0
250
2.0
150
1.0
50
Euro per carton
650
0.0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
Week on Market
"000 cartons
Euro/carton
2004
EU Hass Supply versus Price 2004
10.0
950
9.0
850
8.0
750
'000 cartons
6.0
550
5.0
450
4.0
350
3.0
250
2.0
150
1.0
50
0.0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
Week on Market
"000 cartons
Euro/carton
Euro per carton
7.0
650
EU Greenskin Supply versus Price 2005
8.00
850
7.00
750
'000 cartons
550
Estimate
5.00
450
4.00
350
3.00
250
2.00
150
1.00
50
Euro per carton
6.00
650
0.00
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
Week on Market
"000 cartons
Euro/carton
2005
EU Hass Supply versus Price 2005
10.00
Estimate
950
9.00
850
8.00
750
'000 cartons
6.00
550
5.00
450
4.00
350
3.00
250
2.00
150
1.00
50
0.00
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
Week on Market
"000 cartons
Euro/carton
Euro per carton
7.00
650
W
ee
W k1
ee
W k2
ee
W k3
ee
W k4
ee
W k5
ee
W k6
ee
W k7
ee
W k8
e
W ek 9
ee
W k 10
ee
W k 11
ee
W k1
ee 2
W k 13
ee
W k 14
ee
W k 15
ee
W k1
ee 6
W k 17
ee
W k 18
ee
W k 19
ee
W k2
ee 0
W k 21
ee
W k 22
ee
W k2
ee 3
W k 24
ee
W k 25
ee
W k 26
ee
W k2
ee 7
W k 28
ee
W k 29
ee
W k 30
ee
W k3
ee 1
W k 32
ee
W k 33
ee
W k 34
ee
W k3
ee 5
W k 36
ee
W k 37
ee
W k 38
ee
W k3
ee 9
W k 40
ee
W k 41
ee
W k 42
ee
k
43
Price projection - Fuerte
Gross Selling Price
4 Weeks prior Forecast GS
Green Skins
Average to date
Previous week
Current Week
Next week
4 Weeks time
Season Ave
Benchmark Actual GS
Week
1 to 33
33
34
35
37
12 to 33
GMR
Benchmark
€ 5.00
€ 7.00
*
*
*
*
Forecast
€ 5.04
€ 6.82
€ 5.92
€ 5.09
€ 4.67
€ 4.95
8
7
6
5
4
3
2
1
0
W
ee
W k1
ee
W k2
ee
W k3
ee
W k4
ee
W k5
ee
W k6
ee
W k7
ee
W k8
e
W ek
ee 9
W k1
ee 0
W k1
ee 1
W k1
ee 2
W k1
ee 3
W k1
ee 4
W k1
ee 5
W k1
ee 6
W k1
ee 7
W k1
ee 8
W k1
ee 9
W k2
ee 0
W k2
ee 1
W k2
ee 2
W k 23
ee
W k2
ee 4
W k2
ee 5
W k2
ee 6
W k2
ee 7
W k2
ee 8
W k2
ee 9
W k3
ee 0
W k3
ee 1
W k3
ee 2
W k3
ee 3
W k3
ee 4
W k3
ee 5
W k3
ee 6
W k3
ee 7
W k3
ee 8
W k3
ee 9
W k4
ee 0
W k4
ee 1
W k4
ee 2
W k4
ee 3
W k4
ee 4
W k4
ee 5
W k4
ee 6
k
47
Price projection - Hass
Gross Selling Price
4 Weeks prior Forecast Hass
Benchmark Actual Hass
Hass
Average to date
Previous week
Current Week
Next week
4 Weeks time
Season Ave
Week
1 to 33
33
34
35
37
18 to 38
GMR
Benchmark
7.10
€ 8.25
*
*
*
*
Forecast
7.07
€ 8.42
€ 7.80
€ 6.54
€ 6.08
€ 6.83
10
9
8
7
6
5
4
3
2
1
0
Supply 2005 – All countries
Total EU Avocado supply (updated 19/8/2005)
Bars to left of arrow represent actual shipments
from South Africa, but also
include estimates from other origins.
Bars to right of arrow represent estimates
1600
1400
4 kg Cartons ('000)
1200
1000
800
600
400
200
0
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
Week on market
Israel green
Israel Hass
Spain Green
Spain Hass
Mexico Green
Mexico Hass
Kenya Green
Argentina Green
Argentina Hass
Peru Green
Peru Hass
Chile Hass
RSA Green
RSA Hass
Kenya Hass
51
SUMMARY
• Very competitive commercial environment
• Avocados an exciting commodity
• Tremendous opportunities compared to more mature
industries
• Avocados still in it’s infancy - market expansion to the
health conscious consumer
• Lends itself to value adding
• Opportunities to offer convenience – Ripe & Ready
• A challenge - Match supply and demand – market info
(timely, accurate and reliable)