High production costs are continuing to squeeze grower margin but demand will keep fruit and vegetable prices above long-term averages
Low irrigation costs and improving growing conditions will drive strong fruit and nut production in the first half of 2023.
Vegetable producers are expecting some short-term supply shortfalls following a challenging spring and summer planting period that was heavily impacted by flooding and rainfall events.
The Bureau of Meteorology’s summer outlook has forecast above median rainfall for the east coast through to March 2023 with only central and northern regions of Western Australia currently forecast to receive below median rainfall through summer.
Localised regions across the east coast remain at risk of damaging weather events into 2023, though this risk will reduce as the year progresses.
Fruit and vegetable prices are forecast to remain well above average across most varieties, though strong production will see prices ease from recent highs as the year progresses.
Another substantial almond crop will keep prices below average and largely in line with last season.
Horticultural producers generally will see margins squeezed further over the first six months of 2023 with high packaging, fuel, freight, fertiliser, and labour costs expected to remain a factor later in the year as well.
Fruit in short supply
A wetter than average spring combined with low irrigation costs will drive strong fruit production volumes in the first half of 2023.
However, recent damaging weather events throughout Victoria will keep volumes of certain seasonal varieties constrained, with quality also expected to be an issue into early 2023.
Inflationary pressures and falling consumer sentiment will weigh on domestic demand for fresh fruit, although improved export market access and reduced global freight disruptions will help to offset this decline in domestic demand, particularly for export-oriented produce.
Fruit prices are widely forecast to ease from recent highs, though they will remain above long-term averages with high input costs and a tight labour market continuing to squeeze grower margins.
The labour market remains challenging with visitors on working holiday visas totalling just a third of pre-pandemic levels.
While this should continue improving in the first half of 2023, it is not forecast to return to pre-pandemic levels anytime soon which will keep labour costs elevated.
These factors will see wholesale fruit prices remain elevated despite strong domestic production forecast during the first half of 2023.
Table grape production is forecast to significantly increase this season, though the likelihood of above average rainfall across key production regions including Sunraysia and southern New South Wales early in the year poses a risk to quality thanks to humid conditions.
Increased output is being driven by the maturation of recent vine plantings and low irrigation costs with favourable weather also assisting yields.
The USDA are forecasting a crop in the region of 210,000 mt. This compares to an approximate harvest of 180,000 mt last season.
This increased supply will pressure domestic table grape prices with wholesale prices of White Menindee expected to move back to $2.75/kg with Dark Crimson grapes expected to sit around $2.50/ kg.
Exports are expected to increase to 130,000 mt with improved shipping container availability and lower freight costs to assist producers.
Table grape exports to Vietnam are expected to continue to grow, while the industry is also anticipating a rebound in export volumes to China despite the restrictive COVID-19 zero policy which remains in place.
Apple and pear supply out of major production regions in Victoria is likely to be limited during the first few months of 2023 following damaging weather events throughout key production regions including Goulburn Valley and Shepparton.
The regions impacted typically grow over 30% of Australia’s apple supply and 80% of Australia’s pears.
Wholesale prices across both major apple and pear varieties are currently sitting below three-year averages, these are expected to spike and remain elevated into 2023 as a result.
Shepard avocado season is due to kick off in February and run through May with harvest first starting in Northern Queensland before moving south.
Flowering of this year’s crop has been a little more hit and miss which may see some inconsistent production throughout the region.
This will support prices which will be well above the near record low prices that were seen over the last season.
