Stone fruit growers across Australia are faced with tough decisions, including potentially having to pull out some of their trees, as the coronavirus pandemic bumps up air freight costs and wreaks havoc on export markets.
- Air freight prices have more than doubled for growers exporting their stone fruit
- Farmers might have to pull out some of their trees and restructure their orchards due to COVID-19 trade disruptions
- The domestic market might see a severe oversupply, pushing down prices for all stone fruit
Michael Trautwein grows the full range of stone fruit at his orchards in South Australia’s Riverland but fears limited access to air freight and a doubling of costs could put an “excessive financial burden” on growers.
Mr Trautwein said growers were already severely impacted at the end of the 2019/2020 season when the pandemic first hit, forcing market closures and limiting air services.
“It meant we had to sell a lot more fruit to the domestic market and we saw a very significant drop in price across all of the product types,” he said.
The latest USDA report on Australian stone fruit production is forecasting a 17 per cent decline in exports of peaches and nectarines for the 2020/2021 season.
The report highlights the fact that despite the Federal Government’s International Freight Assistance Mechanism (IFAM) program supporting exporters to secure air freight space, freight costs for exporters are more than double pre-COVID levels.
Chinese market demands fast freight
While growers like Mr Trautwein are already changing their strategies by moving more produce onto high waters this season, some varieties, such as white flesh peaches, are simply not suited for weeks at sea.
Typically destined for the lucrative Chinese market, the juicy rounds need to arrive more quickly.
“They have been planted for export which requires air freight,” he said.
Mr Trautwein said it could lead to a severe oversupply of white peaches on the domestic market in the next few years, affecting prices for other products, including plums, nectarines, and yellow peaches.
“As a grower we have to make considerations, because we know the air freight issue is going to be around until about 2025, that’s the prediction, so we have to find a way on how we are going to deal with the supply of white peaches for the next three to four years,” he said.
CEO of Summerfruit Australia Trevor Ranford said while industry and farmers were closely working with the Government and export partners, they had to look at longer-term options and plans.
Besides the air freight challenges, he highlighted labour availability for the upcoming harvest, starting in October, was a major concern for the industry.
“The reality is that if we don’t have the labour to pick the crop then we will have limited amount to export or to put onto the domestic market,” he said.
Swan Hill fruit association weighs options
Swan Hill Summer Fruit Development Association president and local producer Michael Tripodi has been working with other growers to try and find a cost-effective solution.
“We spoke about getting charter flights in but it’s very expensive and you have to pay for them upfront,” he said.
“The problem is, if there’s a weather event and you can’t fill that charter flight…you still get stung for the freight costs.
“Maybe there will be times when the stone fruit associations around Australia can charter a full plane of stone fruit to get it overseas — that would be fantastic.”
Mr Tripodi said he would send produce by sea if it got to market quick enough.
“I’m working with a couple of people from South Australia in the shipping industry,” he said.
“I’ll be definitely trying it, if the fruit gets there in sound condition then the freight costs will probably be a third compared to air freight.”
Pelamis Group boss: fast ships available
Peter Wahlquist, chairman of Adelaide shipping and tuna fishing company Pelamis Group, said he had been talking to industry about quick transport.
“We have ships running out of South Australia through to Singapore and Asia every second week starting in December,” he said.
“Our ships are quite fast, so it’s an eight-day voyage from Victoria to Singapore, and we have the capacity for around one-and-a-half to two thousand tonnes per voyage.
“Each hull has four different layers in it and each layer can be refrigerated to match whatever the cargo is.”
The COVID-19 pandemic won’t be a problem for the company to transport the highly sought-after stone fruit.
“All of our operations are on the high seas and we don’t generally come into port,” Mr Wahlquist said.
“If we do, it’s the port limit… so we don’t actually have any contamination or COVID problems in that respect.
“However, for this we’d come into Portland (VIC), but the ruling is if your ship has been at sea for 14 days then… you’re classed as being clear.”
Once the fruit arrives in Singapore it would easily be transported to its final destination.
“Because we come into a bonded wharf, it’s still classed as technically outside of Singapore,” he said.
“There it will be transferred through to airports to then join existing air freight services to other ports, such as Shanghai, Beijing and Hong Kong.”
Mr Wahlquist said he could see a future with the fruit sector.
“We’re looking to rebuild the broken supply chain,” he said.
“We’re looking at doing this in the long term, not just ‘let’s make a buck out of it because we’ve got a virus problem’.