Queensland fruit fly is manageable risk, say investors

Australia's Plant Biosecurity Cooperative Research Centre puts the cost of fruit fly at A$300 million a year.

Australia’s Queensland fruit fly is having a damaging effect on growth in the country’s fruit and vegetable export market, but firms with citrus holdings have told Agri Investor that although the insect presents serious challenges to growers, the risk is controllable.

Australia’s Plant Biosecurity Cooperative Research Centre puts the cost of fruit fly for Australia at A$300 million a year in control and lost markets, but does include the growing industry’s potential in its figures.

The Queensland fruit fly can infest a wide range of horticultural crops . The pest permanently inhabits parts of the Northern Territory, Queensland, New South Wales and some parts of Victoria. Tasmania and the Greater Sunraysia Pest Free Area in New South Wales and Victoria are the two areas that areleast affected. The fly lays its eggs inside ripening fruit, and the larvae that emerge damage fruit and vegetables from the inside, even though produce can appear intact from the outside.

Large-scale almond and citrus assets in the country have been buoyed by fast-growing demand from China, according to real estate agents Colliers. Government data shows that between 2010 to 2015 citrus exports to China jumped from 400 tonnes to 29,500 tonnes.

However, difficulty obtaining horticultural permits is holding many producers back from selling to markets like China and Korea, according to a report in Reuters.

“Apart from being a manageable and well understood issue, we always consider the risks associated with bio-security type issues and market access. We do not view fruit fly as a hurdle to citrus exports continuing to grow,” said Blue Sky Alternative Investments investment director Michael Blackeney.

Blue Sky closed an investment of nearly A$10 million ($7 million; €7 million) in land, citrus trees and water assets on 988 acres of Australian farmland last year. The group intends to change the production focus from juice to navel and mandarin oranges for export to east Asian consumer markets, Blue Sky investment director Michael Blakeney told Agri Investor at the time.

Griff Williams, partner and chief investment officer at Milltrust Agricultural Investments, is managing the Royal County of Berkshire Pension Fund’s recent £30 million ($44 million; €39 million) investment into buy-to-let farms in Australia and New Zealand, including a citrus and grape farm in New South Wales. Only some fresh fruit and vegetable products susceptible to fruit fly, including citrus and table grapes, can be sold into China because of bio-security permits, according to Reuters.

Williams told Agri Investor: “Land prices tend to reflect whether they have the fruit fly or not. If you plan in advance you can manage this risk, although it is a problematic pest in Australia.”