May 02 2019
The Apple, Citrus and Other Fruit and Nut Growing industry has performed strongly over the past five years, due to export markets providing new growth opportunities. Apple, avocado and cherry exports have performed particularly well in established export markets, such as Australia and the United States, and in newer markets across Asia and the Middle East. Overall, industry revenue is expected to increase at an annualised 5.8% over the five years through 2018-19, to $866.5 million.
‘New Zealand fruit growers have actively expanded on new and established export markets, allowing them to significantly increase output and build revenue. New Zealand produce is counter-cyclical to many major fruit growers in the Northern Hemisphere. As a result, local farmers can meet global demand when other nations' fruit is out of season. This trend is particularly beneficial for avocado exports to Australia and apple exports to North America,’ said Senior Industry Analyst Tom Miller.
While the industry includes a range of produce including stone fruits, citrus fruits, olives and nuts, the largest revenue growth has occurred for apple, avocado and cherry growers. Demand for these fruits from markets such as Australia, China, the United States, and several other Asian and Middle Eastern countries has rapidly increased. For example, the combined value of apple exports to China and Japan has more than doubled over the past five years. The value of cherry exports has more than tripled since 2013-14, as demand from Taiwan, China, Vietnam, Thailand and South Korea has soared. Additionally, the value of apple exports to traditional markets, such as the United States and the United Kingdom, has also grown substantially over the period.
The New Zealand dollar has depreciated over the past five years, making New Zealand fruit even more price-competitive. Domestic fruit prices have increased over the past five years, which has benefited the industry. However, apparent fruit and vegetable consumption has grown weakly over the period, constraining growth in domestic volume sales.
New Zealand fruit growers will need to continue targeting export markets to support revenue over the next five years. The domestic market is largely saturated, and apparent fruit and vegetable consumption is expected to increase slowly over the period. Domestic fruit prices are also projected to display slow growth, limiting producers’ ability to increase sales. As a result, the best growth opportunities for local producers will be in export markets. However, many of these markets have already been expanded significantly over the past five years, which will limit their future growth potential.
Nevertheless, the launch of new apple varieties is projected to provide higher prices and revenue from some export markets. Industry export volume growth is projected to slow over the next five years, causing profit margins to decrease slightly as export competition from other large players and fruit-growing nations strengthens. Overall, industry revenue is forecast to rise at an annualised 1.5% over the five years through 2023-24, to $933.6 million.
Industries mentioned in this report: