Australia’s berry industry has gone through a period of significant growth in recent years with production growing strongly to over a billion dollars in farmgate value in 2019/20.
While exports have shown solid growth, domestic consumption remains the primary market at over 95 per cent. Growth in production has seen berries become more readily available on supermarket shelves, however it has also had the longer-term impact of pushing prices lower as supply catches up with demand.
"Supermarket shelves are notably full of… Australian berries… with around 75 per cent of Australian consumers buying fresh berries – and most buying multiple varieties.”
Looking forward, with new production capacity of around 12 per cent of total current production expected to bear fruit in coming years, the development of new market access opportunities remains crucial to the berry industry’s value proposition.
Average growth of 9 per cent per year over the past 10 years has seen Australian berry production almost double in that time – making it one of the highest value horticulture sectors in the country. With production spread up and down the eastern seaboard, with raspberries focused down south and strawberries and blueberries up north, it is a large and diverse market.
There are, however, a number of challenges and trends that are common to all berry species. Supermarket shelves have been notably full of an increased supply of Australian berries in recent years, with around 75 per cent of Australian consumers buying fresh berries – and most buying multiple varieties.
On average, the Australian consumer buys almost 4kg of berries each year. As a result of this increased domestic demand, and a production push to year-round supply, prices have begun to moderate slightly with both strawberry and blueberry prices showing slightly less seasonal volatility.
Having said that, recent flood events and international supply chain delays have both contributed to an increase in food prices across the board – including berries – while the recent floods in Queensland and New South Wales are impacting blueberry production and forcing prices higher. Labour shortage issues throughout COVID-19 lockdowns have also put upward pressure on the cost of production as growers struggle to attract and retain skilled labour.
However, the clear macro-trend in the Australian berry industry is one of increasing supply and increasing investment in production capacity, putting downward pressure on prices.
One of the major hurdles facing the Australian berry industry is the inability of Australian frozen berries to compete with the prices of frozen imports. Australian frozen strawberry exports receive $US4,074 per tonne compared with imports into Australia which enter the country valued $US2,066 per tonne.
Similarly, with frozen raspberry and blackberry trade, Australian exports are valued at $US5,818 per tonne compared with cheaper imports into Australia which are valued, on average, at $US3,253 per tonne. The cost of production for berries in Australia necessitates that produce is sold at a premium, either fresh or for value-add products including syrups, jams and to food service.
With a significant amount of new production capacity to come into production in the coming years, gaining market access to new export markets – particularly in Asia – is crucial to ensuring Australian producers receive prices commensurate with the relatively high cost of production compared with competing exporters.
The export case for Australian berries relies on Australia’s solid image for clean, green and safe produce as well as developing reliable storage and export procedures to ensure reliability of quality and avoid spoilage.
While export markets are a clear opportunity to develop new high demand, high return markets, an opportunity also exists locally to take advantage of growing domestic consumer concern over the safety and reliability of frozen berry imports. While frozen berries are a lower price point, many domestic consumers may be willing to pay a higher price for non-imported product.
While the future of the berry industry is clearly bright - with significant investment, better shelf presence in local supermarkets and a more highly diversified production base which sees fewer production gaps – there still remains a number of challenges to the industry. Most notably, the lack of available labour remains the standout challenge for both the industry and government. However, producers continue to face a broader challenge to align the relatively high cost of production and increasing supply with maintaining year-round high value demand.
Madeleine Swan is Director of Food, Beverage & Agribusiness Insights at ANZ
You can read the full April 2022 Agri InFocus report here
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
29 Apr 2022
16 Mar 2018