Low yielding raspberries are one of a number of issues hitting Costa Group.Credit:Shutterstock
The stock plummeted to close at $3.75,its lowest price for the day and a level not seen since February 2017. Huge volumes of shares changed hands as investors headed for the exits,nearly 33 million,the heaviest since the company was listed in July 2015.
It's not the first time this year Costa has been hit by investors after a trading update. In January when it said had experienced"subdued demand"for some of its products and an earlier finish to the citrus season than expected,Costa's market capitalisation fell $915 million in a day.
One problem outlined by Costa on Thursday was the discovery of a lone female fruit fly in a trap on a citrus orchard in the Riverland district last week. Fruit fly is considered a major pest in Australian agriculture. The tiny flies can infest fruit and lay eggs inside,with the larvae that hatches eating the contents of the fruit and making it rot. So being free of fruit fly is a huge advantage to a horticulture area.
The discovery could disrupt Costa's operations in the near and longer term,with the company saying in the near term it could force it to transport a large amount of citrus out of the region for packing.
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"We are in discussion with the relevant state and national agencies,but it appears that approximately 17,000 tonnes of Costa's citrus crop may not be packed in our Riverland sheds and in that event would need to be sent to third-party packers in Sunraysia and also cold treated to meet export protocols,"Costa chief executive Harry Debney told shareholders at the company's annual general meeting.
The fruit fly-free status of the Riverland region,which is predominantly in South Australia,is a major benefit for Costa. The status,if acknowledged by export destinations,means that the fruit doesn't need to be cold treated,which lowers costs.