At a time when business news in New Zealand seems predominantly bleak, BOP Business News discovers there is a bright light on the economic horizon for the region.
As Dan Mathieson departs Zespri to head up the Americas division of giant berry company Driscoll’s he feels confident the industry is well placed to enjoy growing returns, while Zespri retains the sector’s claim for the highest quality export fruit.
Speaking at Mystery Creek Fieldays, Mathieson acknowledged this was not the case little over a year ago as the sector emerged from the challenges of Covid, tight labour supply and quality issues with the 2022 harvested crop.
With this year’s harvest wrapped up, it appears to have benefitted from the best of both quality and quantity, with 193 million trays harvested marking a new record against the previous one of 184 million in 2021.
“I think if I had tried to leave two years ago, I would have been tied up and hauled back by growers demanding I put things right before I go,” admits Mathieson.
The 2022 harvest with its post-Covid labour limitations meant fruit had been harvested to lower standards than usual, with damage often not becoming apparent until it was due for shipment.
In the worst case, almost an entire shipment of Green fruit had to be written off on arrival in Japan, having a material impact on growers’ already depressed per tray payment that year.
“What we learnt was that fruit can turn in quality very quickly and demanded more care from right across the supply chain,” says Mathieson.
A massive industry-wide effort, led by Mathieson who fronted a series of grower road shows to explain the issues, resulted in a major turnaround last year, aided in part by lower-than-expected volumes.
“We now have more good people in the right places to bolster quality checks, to see signs early and make course corrections as needed. We are also conducting many more audits through the process.”
He ruefully acknowledged a bill for $500 million in quality downgrades has the effect of focusing minds on solutions.
Strong markets, good fruit volumes, firm prices, and the ‘all-clear’ on a valuable crop treatment mean Bay of Plenty kiwifruit growers also have plenty to celebrate as they wind up the 2024 harvest.
NZ Kiwifruit Growers Incorporated CEO Colin Bond said good teamwork across the supply chain had ensured timely harvest and packing of fruit this season.
“I would like to thank the thousands of pickers and packers as well as the countless other workers who have rolled up their sleeves over the last year and worked diligently to create a successful harvest for our industry,” he said.
I would like to thank the thousands of pickers and packers as well as the countless other workers who have rolled up their sleeves over the last year and worked diligently to create a successful harvest for our industry.”
More good news came in May for growers.
The season had also been overshadowed by the very real possibility growers would be banned from using Hi-Cane, the spray applied to enable even and well timed budding during springtime.
As average temperatures have risen in the industry’s largest kiwifruit growing region, the spray has become even more critical, but it did face the possibility of being banned by the Environmental Protection Authority (EPA).
However, after a review and committee hearing in late April the EPA allowed the spray to continue to be used, subject to some conditions. Had the product been banned, it was estimated 15% of orchards would have been unviable and a further 20% barely profitable.
Colin Bond said the lost income to NZ Inc. would have amounted to over $1.5 billion in export earnings over ten years, and that was conservative at best.
He said he had never had as many phone calls or emails from growers expressing a deep sense of relief about the decision.
“The uncertainty over Hi-Cane has been a major concern for investors and growers over the past two years and has created enough uncertainty to affect orchard prices to an extent,” he said.
Colliers’ kiwifruit orchard survey supports this with orchards in late 2022 and 2023 selling for significantly lower prices than their peak in autumn 2022. The volumes of orchard sales had also dropped significantly, to 25 last year compared to 70 in 2021.
However, the market now appears to be turning, with a return to more normal crop yields this season, stronger price signals, and continuing strong demand for SunGold kiwifruit.
Last season’s crop reported strong average per tray values after a slump in 2022 with Green returns up from $5.78 a tray for the 2022 harvest to $9.55 a tray for last year’s harvest.
It did however come on the back of last year’s exceptionally low harvest of 134 million trays, which were impacted by severe weather events including frosts and floods.
Most growers were 20-30% down on their anticipated volumes, making this year’s harvest more of a “return to normal.”
Labour woes also appear to have lifted, thanks to more RSE workers and backpackers in New Zealand, and greater packhouse automation coming on stream.
Dan Mathieson said significant market opportunities exist in the United States and Vietnam.
To that end Zespri has expanded its Vietnam office across two cities in the developing nation and increased its US staff from five to 30.
From July Mathieson is being replaced by Zespri’s chief operating officer Jason Te Brake.
