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Fruit and veg production expected to go bananas

16 July 2021 | 2 min read
By Sean Hickey (Agricultural Analyst, Rural Bank)

Strong production is on the horizon for fruit and veg producers.

This has been driven by seasonal conditions and additional plantings. Improving domestic demand for locally grown produce has also continued into 2021, driven by a rise in home cooked meals and increasingly health-conscious consumers.

The improved demand and production forecasts have many growers optimistic heading into the back half of 2021.

Though despite these positive factors, industry wide challenges remain...

Fruit-fly outbreaks continue to plague producers

Recent fruit fly outbreaks throughout the Riverland region continue to impact fruit producers. There have been nearly a dozen outbreaks across South Australia with more recorded nationally. South Australia is currently the only mainland state classed as ‘fruit fly free’. This classification adds millions of dollars in benefits, primarily through extra export opportunities and relaxed treatment requirements. If this classification is revoked, growers would lose access to substantial benefits.

Fruit fly activity is also expected to increase in parts of Victoria and Southern NSW. This will further impact the exportability of fruit from these states. Restrictions on movements of fruit across states are now in force to address the issue. Cooler conditions throughout winter will also assist in bringing the outbreaks under control.

Ongoing labour shortages

A shortage of seasonal workers is continuing to cause headaches for growers. Fewer than 40,000 working holiday makers currently remain in Australia (down from 150,000). Backpackers on working visas accounting for 80 per cent of harvest workforce. Difficulty in sourcing labour is leading some growers to leave produce unharvested. Some producers have even pre-emptively reduced the number of plantings for upcoming crops, particularly those that are more dependent upon labour to harvest.

The shortage of seasonal labour will ease as growers come into the spring period. By early next year, seasonal labour levels are forecast to reach 70 per cent of pre-COVID-19 levels. This is a significant improvement on present numbers, currently sitting at 30 per cent. Federal and State governments continue to work with growers to address the issues with several initiatives now in place to assist growers. These programs have seen a greater number of farms gain access to seasonal workers. However until borders reopen, a lack of workers will remain an ongoing issue for many producers.

Going bananas

Despite these challenges, the general outlook for producers is favourable. Increased plantings and cool conditions have provided fantastic growing conditions for fruit producers. Citrus and avocado production in particular is forecast to rise. Domestic demand for Australian fruit also remains strong. Though a drop in exports, particularly from China, may lead to an oversupply of fruit in the short term. This will likely see prices fall before rising later in the year as supply returns to normal.

Mild weather and low irrigation costs have also provided fantastic conditions for vegetable production. Particularly in Western Australia, New South Wales and Queensland. Domestic demand for staple vegetables (onions, broccoli, carrots) remains high. Particularly as they are often used in both home cooking and food service industry. The recovery in the foodservice sector has continued over the past six months. As a result, revenue for the sector now back above pre-covid levels.

Irrespective of the challenges facing growers, the outlook for the industry remains positive. Strong production forecasts and improving demand will hold producers in good stead throughout the back half of 2021.

For more information download Rural Bank’s half yearly outlook report here.

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