Australian apple and pear growers are calling on marketers and retailers to set fair prices for new season fruit and not use the current surplus to sell quality fruit at below-cost prices.
The industry’s peak body Apple & Pear Australia Limited (APAL) said growers were struggling with some of the lowest farmgate prices the industry could recall and recent wholesale prices of as low as $1 a kilogram for pears were unsustainable.
APAL chief executive Phil Turnbull said without a fair price and without mutual commitment to the apple and pear category, the industry faced decline, to the benefit of no one, least of all the Australian consumer.
“The cost of production of a carton of Class 1 Australian apples or pears is in excess of a $2 a kilogram*,” he said. “Current pricing well below this is putting considerable pressure on orchard businesses.”
Mr Turnbull said while there might be an expectation that lower pricing would grow volume, all indications from the retailers to date suggested otherwise, with it appearing that low pricing was not driving growth and both apple and pear consumption being either flat or in decline.
“A low price might shift an increased volume in that week, but that is not translating to a sustained growth in consumption,” he said. “Apple consumption remains at around 8kg/person/year and pears at 2.5kg/person/yr. We need a carefully researched and well thought out approach to drive a long-term growth in consumption, not a short-term ‘special’ that sets unrealistic consumer price expectations.
“We are calling on wholesalers and retailers to recognise the Australian consumers’ preference for high quality Australian produce and to provide growers with a sustainable price that enables them to deliver that.”
Mr Turnbull said while price was a private arrangement between buyer and seller, retailers marketing around 80 per cent of the industry’s fruit were in a unique position of responsibility. The last 18 months had been a very challenging time for apple and pear growers with bumper crops, stagnant domestic consumption and low exports contributing to an oversupplied market. Fruit was being supplied below the cost of production by growers forced to take what they could get to make way in sheds for new season fruit.
He said the industry adjustment needed to rebalance the market was a complex, long term issue that included growing exports and consumption and assisting the industry to adapt to change.
The Apple & Pear Industry Export Development Strategy released last year had set out a strategy to increase exports to 10pc of production by 2027 and industry was now focused on boosting domestic consumption.
“We have to understand the underlying issues here,” he said. “To this end we have commissioned a considerable piece of independent consumer research to understand this lack of growth in our category.
“APAL is working with industry and retailers to manage our category in a more orderly fashion and this research will form the basis of how we engage with consumers in the future.
“However, the key here is to support growers while this re-engagement with the consumer happens.”
This challenge of regenerating consumer interest in our wonderful products needs to be addressed by both industry and retailers. APAL is committed to working with retailers to improve the current unsustainable situation.
* Based on cost of production data for Class 1 fruit, Orchard Business Analysis 2016 Actual 2017 Forecast.