APAL calls for fair wholesale prices in wake of apple, pear glut

Apple and Pear Australia Limited issued a plea in March to those buying new season apples and pears for resale, not to take advantage of the current oversupply. 

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.

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“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.”

ACCORDING to this year’s Australian Bureau of Agricultural and Resource Economics and Sciences agricultural commodities report released in March, productivity growth in Australia’s established industries like the apple industry has occurred mainly due to investment in new production systems.

“Consolidation has also increased scale and reduced costs. In the five years to 2015–16 a move to high-density planting in the apple industry has contributed to a 30 per cent increase in fruit-bearing trees,” ABARES said. 

“By 2022–23 apple production is projected to increase to 325,000 tonnes compared with a forecast of 305,000 tonnes in 2017–18.

“Australian apples are the current priority for horticultural market access negotiations with China. China’s import market for fresh apples has been dominated by imports from Chile, New Zealand and the United States.”

Mr Turnbull said while price was a private arrangement between buyer and seller, retailers marketing around 80pc of the industry’s fruit were in a special position of responsibility.

IN the past 18 months, apple and pear growers have experienced 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.

Mr Turnbull said the industry adjustment needed to re-balance 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 focused on boosting domestic consumption.

“We have to understand the underlying issues here,” Mr Turnbull 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.”