May 20, 2013

Fruitful new markets – at home and overseas

Until the age of 19, Evangelos Kalafatis grew fruit and herded sheep in a remote Greek village. Today he heads a family business that supplies stone fruit, apples and pears to supermarkets across Australia – and which features in the NAB Agribusiness calendar for May.

Evangelos Kalafatis grew up in a Greek village, growing fruit and herding sheep in the mountains. At the age of 19, he moved to Shepparton,Victoria and took jobs as a contract labourer, saving every penny until he could buy a farm of his own.

He worked long and hard, planting fruit, growing vegetables between the rows and selling his produce at the wholesale market in Melbourne. Then, in the late sixties, a supermarket bought some of Evangelos’ apricots, launching a relationship that has lasted over 40 years.

Today the Kalafatis Group is one of the largest suppliers of stone fruit, apples and pears to Woolworths across Australia. Evangelos, his sons, Jimmy and Donny, Jimmy’s wife Doreen and three of his nephews handle every aspect of the business from growing through to packing and delivery to marketing. They’re also the featured family for May in the NAB Agribusiness Calendar.

Climate challenges

Like all growers, the family continues to navigate challenges – not least the Australian climate. “People used to talk about normal seasons but we’ve come to realise there’s no such thing,” says Jimmy. “We’ve had floods, we’ve had drought – you have to think on your feet and be ready to respond to conditions as they arise.”

No-one in the family had experienced anything like the drought that stretched from 2003 to 2009 and they had no idea how the trees would cope. Fruit grown without enough water will be too small to be commercially viable. And dead trees spell disaster, with replacements taking up to 15 years to reach their full potential.  “We ended up buying water on a weekly basis at up to $1,000 a mega litre ” says Jimmy.

Unlike most industries, where retail prices are set by adding a profit margin to the cost of production, horticulturalists trade every day and negotiate price on a daily or weekly basis. One of their biggest challenges is managing cash flow in such a dynamic and volatile environment.

“However good a grower you are, if you’re not up to speed financially you could miss out on an opportunity that’s here today, gone tomorrow,” Jimmy continues. “I’m doing research every minute of the day. Even when I’m having a coffee with a grower or talking to a buyer I’m listening for what’s going on because things can change so quickly.”

Broader horizons

In terms of positive change, TV cooking shows have proved an unlikely ally by broadening people’s horizons. “Instead of just seeing fruit as a snack food they’re now seeing it as an ingredient in both sweet and savoury dishes,” says Jimmy.

Increasing consumer sophistication is also creating demand for new and exclusive varieties. “These are niche markets where you can often get a good margin,” Jimmy adds. “We’re vertically integrated and control decision-making at every stage so we’re well-placed to exploit these kinds of opportunities. It can be tough for growers who don’t have this kind of structure but they can get around this by aligning themselves with those who do.”

Jimmy is also optimistic about overseas markets. “I believe we have to expand our exports to take pressure off local markets, which are relatively small,” he says. “There seems to be a growing appetite for Australian produce, particularly in Asia, where they trust our produce to be safe and they’re prepared to pay more for that security. I think we’ll continue to see huge opportunities opening up for growers who are ready to take advantage of them.”

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