Uncertainty ahead for Zespri

It's the end of the golden weather for New Zealand's kiwifruit marketer Zespri which notched up record global sales of $1.62 billion on last year's record crop.

In a buoyant result that stood in stark contrast to the actual situation on the ground today, Zespri's 2011-12 financial result saw revenue climb 7 per cent on sales of 116.5 million trays.

Record crop volumes increased total returns to New Zealand growers by 11 per cent to reach $980.4 million.

Zespri chairman John Loughlin said average orchard gate returns for growers increased by 8 per cent to $45,206 per hectare.

New Zealand Kiwifruit Growers president Neil Trebilco said the financial results reflected the crop harvested in April-May last year, before the full impact of the vine-killing disease Psa was felt.

"It was a good result for growers."

Mr Trebilco said green kiwifruit growers would have liked a better return per tray but the economic situation in Europe, the main market for the green variety, was not good.

Mike Smith, the chairman of the Green Growers Association, said there was nothing they could do about it. As the economic environment in Europe weakened and the New Zealand dollar rose in value against the euro, it would just get worse.

He said the latest buzz word SGB (slowly going broke) especially applied to kiwifruit green growers.

The gloomy outlook for the darling of the kiwifruit industry, the gold variety, was highlighted by Mr Loughlin who said that 2011's record gold crop of 29 million trays was expected to fall to 20 million trays this season.

It was against a big picture of ongoing economic uncertainty, rising costs and a volatile dollar. Mr Loughlin said it was against these significant headwinds that the united structure of New Zealand's kiwifruit industry would really prove its worth.

"These factors would continue to be a drag on the industry in 2012-13. Their impact would be compounded by the fact that the 2012 harvest was the first where crop volumes have been significantly hit by Psa."

Zespri has positioned itself for this year's lower harvest by reducing its corporate costs by $10 million - 14 per cent.

The marketer's net profit was $20.5 million compared to $7.3 million a year earlier. The net profit for 2010-11 was hit by Zespri's big lump sum contribution to the Psa Kiwifruit Vine Health campaign spread over three to four years.

Zespri's first indicative forecast of returns to growers for the current season was for green and organic to remain similar to 2011-12 returns, while the lower volume forecast for gold was $13.70 to $14.20 a tray compared to the $11.90 a tray achieved in 2011-12.

Mr Loughlin expected gold volumes to begin recovering in 2014-15 as the graftings of the Zespri variety Gold3 began to take effect.

Zespri's financial report highlighted the huge difference in value between the green and gold crops. The average orchard gate return per hectare in New Zealand for green was $33,125 while gold returned nearly $91,000 a hectare.

New Zealand's green harvest last year was 73.3 million trays compared with gold's 29.1 million trays. The average returns for last year's 3.5 million-tray organic green crop was $35,500 a hectare.