Tuesday, March 5, 2024

Low crop volume overwhelms Zespri value lift

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Ten percent improvement in Green kiwifruit outlook won’t offset declines.
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Growers of Green kiwifruit may have outwardly been the biggest winners from Zespri’s latest payment forecast that has per tray returns up 10% on earlier predictions, but the lift has not offset significant declines in orchard productivity this season.

The kiwifruit marketer has lifted its earlier August Green forecast of $8.10 a tray to $9, with a range of $8.75 to $9.25. 

The lift is expected to take forecast per-hectare revenue to an average of about $62,000. 

While better than the $56,000 forecast in August, it remains well behind 2021’s $75,000 per hectare return, and 2020’s record setting $77,000 per hectare. 

Zespri CEO Dan Mathieson acknowledged the lift in prices will be welcomed by growers following a particularly tough couple of years, when ongoing cost pressures, climate impacts and labour shortages have affected profitability. 

New Zealand Kiwifruit Growers Inc CEO Colin Bond welcomed the stronger price forecast from Zespri, with $9 a tray being the highest ever for Green fruit, well ahead of the previous top price of  $7.51, set in 2020.

However, he said the price is unlikely to offset the yield losses, with Green fruit volumes down on average 36%. SunGold volumes are down by almost 20%.

“This has resulted in the per hectare returns for gold and green being the lowest since 2017, meaning that many growers will still be hurting financially.”

This season’s 140 million-tray crop volume was significantly back on 2022’s 170 million.  Frosts, poor pollination and storms severely impacted orchard productivity in many cases.

“We certainly did not want a crop as low as we got this year, but it has allowed us to step back and deal with the challenges we had,”  said Mathieson.

Payment predictions have also been lifted for SunGold fruit, up at $12.35 a tray from the earlier forecast of $11.50, and newly commercialised RubyRed at $26.10 up from $23.30 a tray.

The lift in revenue has come from the exceptionally low supply and continuing strong demand across all markets for the limited amount of higher quality fruit.

“We saw lower productivity per hectare this season, and growers are still doing it tough, but sales have been strong, and confidence is growing that we are moving to a more positive place. “It is also good to see that as we head into pollination for next year’s crop, yields are looking better. We will be looking to see an overall increase in volume for next year,” Mathieson said.

The lift in values also reflects the focused  effort made by the sector to lift fruit quality this year after dire quality results last year when a bumper crop converged with significant covid-induced labour shortages.

However, “our job on quality isn’t done yet, and we now have a huge focus on next season. We need to maintain this focus as we look to 2024, when we are expecting to have a much larger crop and likely our biggest year-on-year growth in volume.”

Mathieson confirmed next year’s crop is anticipated to be about 180 million trays. Final crop estimates will be confirmed in February.

Demand is proving strong for the fruit across all markets, including China, which has been softer for some primary sector produce, and demand is also growing in emerging markets including Vietnam.

“If our current forecasts hold true, we expect to see greater productivity per hectare come through in the next harvest, which will help meet that growth.”

Labour supply, an issue that stymied a quality harvest in 2022, appears to also be improving, with orchard contractors reporting a good supply of overseas backpacker workers on hand to meet pre-Christmas tasks, and confident that supply would continue through to harvest.

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