The coming kiwifruit season will provide a reset opportunity for Zespri as it strives to lift crop quality and restore a bruised reputation after last season’s problems.
Zespri CEO Dan Mathieson said the company is pulling out all the stops to revisit its entire supply chain to eliminate the risk of another season where quality issues compelled it to pull $3.36 a tray off SunGold kiwifruit’s value and $2.10 a tray off Green’s value.
All up, growers have borne the cost of poor-quality fruit downgrades to the tune of almost $500 million, well up on typical levels of $120m-$150m.
Speaking to growers at Fieldays in Hamilton, Mathieson acknowledged efforts to look for greater transparency through the supply chain.
Covid’s corrosive effect throughout the economy was highlighted by the kiwifruit sector’s struggles to harvest the year’s crop, at a time when it was already 6000 workers short.
Covid pressure right at harvest peak not only left growers without enough harvesters, but also left Zespri short on auditing crews to ensure a quality-conscious harvest took place.
“Certainly, that physical challenge at harvesting was the main contributor,” Mathieson said.
Earlier quality issues had left Zespri’s Asian GM saying he could not sell the “potatoes” being sent to him.
The problems were also attributable to pressure on growers to deliver early-harvested fruit in an attempt to manage covid-induced staff shortages.
However, the resulting volumes of long-stored fruit exacerbated the quality problems, with fruit eventually decaying in post-harvest storage.
“We know we incentivised growers for early-harvested, long-stored fruit. We are looking at how do we incentive better behaviour at harvest – if the fruit being picked is damaged, it doesn’t matter what happens after that, the damage is done.”
Similar pressures were experienced further down the supply chain and New Zealand staff had to work hard to remove as much damaged fruit as possible before it hit the shelves.
“The best place for poor quality fruit is here and not in the market,” Mathieson said.
This year’s harvest of 167 million trays represented a step back in volume from the previous year’s 178 million trays. Mathieson said he expects 2023’s harvest to be “flat at best.”
This was in part thanks to the October frost event that came hard on the heels of a below-average bud burst, the result of a lack of winter chilling.
Initial survey work indicates frost losses of 10-20%, and they are “more likely” to tend towards 20%.
The new Ruby Red fruit is likely to have incurred losses of 15-25% on its early commercial plantings.
Mathieson said the second year of lower-than-expected volumes did at least give the sector an opportunity to catch its breath as it reset quality parameters.
He was advising growers to look further out to 2024 when Zespri anticipates a surge in SunGold volumes.
With an additional 750ha coming on stream between 2018 and 2021, and each 750ha tranche representing about 10 million additional trays, the sector is running behind on crop volume growth and well overdue for that volume surge.
Green growers are anticipating a particularly tough year with about half likely to either only break even or be in the red.
“Our goal here is to try and get orchard gate returns up to a consistent $7/tray.
“We are looking at opportunities to bring new Green kiwifruit to market.”
There are four varieties being trialled with the possibility a new one, offering a sweeter taste, will go commercial in 2027.
Despite problems at home, Mathieson was upbeat about market prospects. After an initial drop in Shanghai sales due to lockdowns, volumes have since lifted to pre-lockdown levels for both SunGold and Green.
Meantime the United States is showing growing promise with SunGold kiwifruit the fastest growing fruit item across the country’s fruit category for the past three years, and now totalling about 8 million trays.
Mathieson said a grower had summed up the message Fieldays when he told him the industry’s focus had to be to stop growing for dollars and start growing for quality.
“And when you do that, the dollars will come.”
