A good-sized Te Puke kiwifruit orchard forced into a mortgagee sale has sold for a bargain price of just under $1 million.
Four bidders chased the 7.8 ha property on No 3 Rd at the Harcourts auction yesterday and the neighbours, a retired farming couple, succeeded with a final offer of $940,000 - representing nearly half the current value of kiwifruit land.
Based on the size and production rate of the orchard, it was one of the lowest sale prices seen in the industry in the past 10 years.
The auction price will send ripples of concern through the closely-knit Te Puke kiwifruit community, particularly for those thinking of selling.
The new owner, who did not want to be named, said "we will try to preserve the orchard to the best of our ability. What we've seen in the past two years is kiwifruit (payments) going down but farming and horticulture goes in cycles. I hope it doesn't backfire on us."
He and his wife sold their 370 ha cattle and sheep farm in Taupo and moved to No 3 Rd on to a 22 ha lifestyle block.
"We've been neighbours for three years and we felt for their (previous owners) situation. They are well known in the area," he said.
Christchurch-based Carlton Finance forced the mortgagee sale. It's understood the property - which produces about 40,000 trays of green kiwifruit a year on 5 canopy hectares - had three mortgages over it.
The established orchard is managed by EastPack under contract till June 30.
Growers returns have slid over the past two seasons - first as a result of high fruit loss and then because of the strong New Zealand dollar against the US greenback and Japanese yen.
Based on the December 2007 forecast, growers will receive an average orchard gate return of $3.07 a tray for green kiwifruit this season - down $1 from the actual return of $4.09 a tray for the 2006/07 season.
The latest predicted average return is barely enough to cover the cost of production.
Over the past four years buyers have been paying more than $300,000 a hectare for quality kiwifruit orchards, including a house.
The property auctioned yesterday included a modern, five bedroom home, worth at least $400,000, and the sale of the kiwifruit land represented a value of more than $100,000 a hectare.
The 7 ha of land, without kiwifruit on it, would have been valued at about $800,000.
At least six similar orchards are presently on the market for asking prices of between $1.5-$1.6 million.
Harcourts Advantage Realty's John Blaauw, who marketed the No 3 Rd orchard, said the sale will send "a bit of a shock" through the industry.
He said he felt sorry for growers having to sell at the lower prices. But there will always be a market for the fruit and people buying a cheaper orchard could still make a reasonable living.
Mr Blaauw said 10 years ago a kiwifruit property with a three-bedroom home and 3 canopy hectare orchard could be bought for $335,000.
Yesterday's auction attracted nearly 100 interested people, and auctioneer Fiona Kristensen opened up at $500,000. The bidding jumped in $50,000 lots to $850,000, and then in $10,000s to $890,000.
At one stage, the bidding increased by only $1000, prompting Ms Kristensen to jest: "Who would believe we are squabbling over $1000 for a kiwifruit orchard."
The bidding stalled at $910,000. After Ms Kristensen talked with the finance company, she extracted an amended bid of $940,000.