Kiwifruit post-harvest operator EastPack has shown it is in good heart by producing a record profit of nearly $20 million and attracting new suppliers.
EastPack, which has packhouse facilities in Te Puke, Edgecumbe and Opotiki, recorded gross profit of $17.7 million (before tax, interest, rebates) for the year ending December, after handling 21.3 million trays last season.
Its profit increased 44 per cent and it means the grower-owned company will pay a 30c per tray rebate, maintain dividends at 15c a share, and reduce overall debt.
EastPack chief executive Tony Hawken attributed the results to the increased kiwifruit volume and improved productivity.
The company has introduced a lean manufacturing programme and "we are more efficient in what we are doing," said Mr Hawken. Debt was now $11 million, which equates to 52 cents a tray.
He said EastPack was focused on helping its growers achieve economic results for their business, and supporting them to grow high value fruit.
An excellent storage season and low fruit loss last year enabled the company to further increase the orchard gate return (OGR) per tray for green growers.
Earlier, EastPack said it was increasing its 2011 OGR returns by a further 10 cents per tray, to an average $4.24, amongst the highest OGR in the industry and above Zespri's average of $3.72 a tray.
EastPack has reduced its packing costs for this year by 20 cents a tray, is providing a 20 cent cash rebate for new and existing suppliers, and will not be charging for Class Two reject fruit, both green and gold.
Mr Hawken said the company now expects to pack at least 18.8 million Class One trays this season, more than two million trays above its original 2012 crop estimate.
The additional supply is coming from 26 new growers who have come onboard. "Also, the extent of crop loss as a result of Psa is not as high as initially budgeted, although Psa has had and will continue to have a serious effect on kiwifruit vines," Mr Hawken said.
He said he believed the Psa impact will be greater in 2013 when more Hort16A vines will be coming out. Mr Hawken supported the general release of the new Gold3 variety and he expected most of the gold growers, particularly in Te Puke, will take it up, as they don't really have an alternative.
"I can't imagine them swapping back to Hayward green [providing lower returns]," he said.
"Gold3 is not bullet proof but it seems to be tolerant [to Psa] and as a company we can run with it. We are certainly in a lot better place now than what we were five months ago."
Mr Hawken said Zespri had done a good job consulting growers and the industry and the terms of payment for the Gold3 licences was a good result.
This week Zespri announced it will issue Gold3 licences at $8000 a hectare on deferred payment terms. Growers will pay a deposit of 20 per cent and their next payment will be due when their orchards come into production.
At their peak, Hort16A gold licences were more than $30,000 a hectare.
Present Hort16A growers are expected to buy Gold3 licences covering at least 1000 hectares, and planting will take place during the winter. An additional 400 hectares of Gold3 licences will be released to green growers on the same commercial terms.
So far about 350 hectares of kiwifruit have been removed because of Psa and that's estimated to climb to 850 hectares by the end of harvest.
The latest harvest has kicked off with picking in Poverty Bay and the first shipment of Zespri Gold will leave for Japan in early April.
Zespri is expecting a national crop of 95 million trays, down from a record 115 million trays last year. The latest crop will include 20 million trays of Hort16A, down from 30 million, and 70 million trays of green kiwifruit.
Up to one million trays of Gold3 will be sold this year, after it was first commercialised in 2010.
Sally Gardiner, Zespri's general manager supply chain, said: "This will allow us to continue to build the profile of this fruit [Gold3] with our customers around the world, and also increase our understanding of the fruit's performance through the supply chain".