Costa plans avocado ‘revolution’

Do you resent buying two avocados just to get one that is edible? The nation’s largest fruit producer hears your pain and has a plan to boost quality.

The avacado industry is planning a revolution in how they are farmed.

The nation’s largest fruit and vegetable producer, Costa Group, wants to transform the way avocados are farmed amid a growing backlash from retailers and consumers against the industry over the declining quality of produce.

Independent studies in recent months have shown nearly half of consumers surveyed claimed they were unhappy about the quality and consistency of avocados available in supermarkets and produce outlets.

Costa chief executive Harry Debney said too often consumers felt they had to purchase two avocados to get one of sufficient quality, and revealed that the company was in talks with Woolworths and Coles on the issues.

Avocados are the second fastest growing produce globally after blueberries.

Mr Debney revealed Costa was working on further trials of protected cropping of avocados, which could see high density plantings trellised under permanent netting across Costa’s avocado farms in four states.

Costa Group closed up 3 cents at $5.42

Costa Group, which is partly owned by former Geelong Football Club president Frank Costa, has transformed the way fruit and vegetables are farmed by growing them in glasshouses and gal­vanised steel tunnels.

“What we have been doing on the quiet in the background, and we started this 14 months ago, is looking at very high density plantings, trellised under permanent netting,” Mr Debney told The Australian.

“We think we have to change the game in terms of how that whole paradigm works. We have been really encouraged with the early results.

“I would be expecting before the end of this year our board will say, ‘Lets go ahead and do a new production paradigm in avocados’. We will be approaching 1000 trees per hectare, which will be trellised, permanently netted and we will be gearing up for mechanical harvesting over time.

“This will change the whole yield, quality and cost paradigm.”

Over the past two years Costa has been buying up avocado farms across the country, including through its joint venture with Macquarie Agricultural Funds Management, to create its fifth core vertically-integrated produce pillar and to ultimately achieve year-round supply.

Costa has so far achieved avocado production for 10½ months of the year but Mr Debney said the company would await the results of protective cropping trials before embarking on further acquisitions.

“It doesn’t make much sense buying traditional orchards if you are going to do a whole new reset,” he said.

“We have a good initial footprint but we want to look at this new technology opportunity before we just keep buying more of the same.

“People used to say, why aren’t you buying blueberry farms? Because we created our own farms.

“You couldn’t buy them then and we developed them.

“I don’t know for sure yet and we need to be careful not to get ahead of the game, but I suspect in a year I would say we would have whole new form of agronomy in avocados.”

Costa Group developed its “Lovacado” brand last year which is governed by a new harvest protocol to guarantee the quality and consistency of the product.

“We as an industry have to change things to ensure that consumers have a lot more confidence in the products … our view is we have to change the production paradigm,’’ Mr Debney said.

Costa shocked investors in January when it reported lower than expected prices for its tomatoes, berries and avocados, wiping $900 million off the market value of the company.

Last month it reported a first-half net profit after tax of $4.3m, down from $74.5m in the first half last year, but the company reaffirmed it expected profit growth of at least 30 per cent for calendar year 2019.

As a result Costa shares have climbed back over the $5 mark after falling to $4.64 in January. They closed 1 cent higher yesterday at $5.40.

While Costa has previously claimed its protected cropping model has made its products more immune to the volatility of agriculture, sceptics on the stock have been vindicated over the past nine months as profits have failed to meet expectations.

Mr Debney said it was now up to the company to prove the nay-sayers wrong.

Harry Debney will convene a luncheon panel at The Australian’s Global Food Forum in Sydney next week.