A "refreshing" season for Australian citrus exporters
![A "refreshing" season for Australian citrus exporters A "refreshing" season for Australian citrus exporters](https://cdn.freshfruitportal.com/2020/01/News-shutterstock_356279348.jpg)
Whether it be growers leaving fruit on trees, or exporters incurring losses or breaking even just to keep relationships, recent years have not been kind to the Australian citrus industry. But with a more manageable exchange rate and other key factors at play, this season "hasn't broken records but it's been pleasant", in the words of Seven Fields produce marketing manager Brett Jackson. At www.freshfruitportal.com we hear from him and others about a changing trade climate and a new U.S. export set-up.
Pacific Fresh Produce chairman Frank Mercuri says there is almost an "open book" on what Australian citrus growers can sell at the moment, but short supply means not all orders can be fulfilled.
"It is a good problem, because this year they ask me 'how much can you do?' whereas last year you'd say 'how many do you want?'" he says.
"There's been a lot of fruit going to China as well and our area [Riverina] has had a lighter crop so there's less fruit available. At the moment everyone is chasing fruit.
"It’s ideal because the grower returns are definitely better than what we've had in the last two years. The last two years are probably the worst ever that I can remember; some growers didn't even pick them off the trees, they weren’t even covering picking costs."
Delica Australia export manager Ryan Smith says the industry initially benefited earlier in the year when Chinese authorities shut out Californian citrus over brown rot concerns, but there are many other factors that have boosted the sector.
"All of a sudden the Chinese looked to us and we hadn’t started our Navel season yet, so China just kicked off from day one wanting us to ship from Australia. It was a very strong market," he says.
"That’s taken a certain amount of fruit that would normally go to America or Japan, so it means there’s not as much fruit available for those markets."
He says the Japanese market has been going well with good quality fruit, which is firm, has good brix levels and is arriving in good condition.
"What also is helping is the Australian dollar is weakening, especially against the yen, so that's all helping as well, and the Japanese market is pretty good.
"We’re switching over from the Washington Navel to the Late Lane Navel and the volume of Late Lane is much smaller this year, and that’s where our volumes are dropping."
Aside from exchange rates, another key change for the industry is the removal of export efficiency powers (EEP) for shipping the U.S., where previously exporters could only market their fruit through Florida-based DNE World Fruit Sales.
"The last couple of years we’ve just been keeping our foot in the door [in the U.S.] but not with very large volumes, with three or four containers," says Mercuri.
"We have packed up to 100 containers there in years gone by when the dollar was pretty good. Now, this year we’re probably going to do about 30 containers for the U.S."
Mercuri says the interest from the U.S. may not have been so great if the exchange rate was still over parity, but for his company the situation has been better than before when only DNE could buy the fruit.
"Some of the companies you're dealing with have different charges to what DNE used to have. The charges probably aren't as high, and if you're saving a dollar a box that makes a lot of difference in the end.
"I think it’s a combination of crops, the dollar going down and the Asian market that’s taken a fair bit of fruit this year."
His comments are echoed by Jackson.
"There are a number of factors that have meant the U.S. market has been a lot more favorable for Australian citrus this year, and I don’t know how much of that you can attribute to the end of the EEP – you're not really comparing oranges with oranges are you?"
Oranges versus easy peelers
Mercuri says the trend towards easy peelers continues in the Australian citrus industry, with Navels on the decline.
"It’s easy to throw a little mandarin in the kids’ lunchbox at school than what it is to put an orange there – Coles and Woolies [Woolworths] are definitely telling us that," he says.
"Everyone in Australia is too busy to sit down and peel an orange. I do think the Navels we are selling are probably more the older people who are used to buying oranges."
While acknowledging this trend, Jackson is still bullish on the continued success of Australian Navels.
"I think that there’s a lot of talk about Australia not being able to compete with Navels because they’ve become such a commoditized product, and to a degree that’s true, but this year the demand for Navels has been very strong.
"We have been surprised at how big demand has been for Navels this year. The dollar definitely helps. I think that at $1.10 Australia probably can’t compete with Navels, but at 80-85 cents Navels become profitable for Australia again.
"It’s quite refreshing. It’s been quite a different year to the last four or five years – demand has been strong, prices have been solid."
Both Mercuri and Smith mention that competition hasn't been as strong this year, either from South Africa or Chile.