Kiwifruit growers have oversubscribed the tender offer for Zespri's release of 400ha of new Gold3 licence, which is likely to sustain high pricing for Gold orchards.

There were 266 successful bidders out of more than 1000, who tendered for a total of 1300-plus ha. Zespri plans to release a further 1200ha of G3 licence over the next three years.

Median prices were $168,478 for the 200ha restricted to Green growers converting to Gold, and $173,913 per ha in open tender.

The lowest successful bid price was $142,000 per ha in the open tender. Zespri said it would not be disclosing the highest bid.


Chief executive Lain Jager said it remained to be seen how the industry would respond to future licence tenders.

"Some growers will say those prices were very high, but it was a closed tender auction system and the prices were an outcome of what growers were prepared to pay," he said.

"Inevitably what will happen now is the industry will look at the outcome and there will be discussion over the next couple of months. It looks to me like there was a good spread of opportunity across the industry. It's not as if anyone snaffled all the licence." (see box).

The potential impact of the cultivar revenue was recognised by Zespri issuing a new corporate after-tax profit for 2016/17 of $70-$75 million, up from its April forecast of $25-30 million.

However, Mr Jager said while the "significant" extra income stream had to be recognised, about 80 per cent of bidders had opted for a deferred payment mechanism.

"Our normal business is not selling Gold licence," he said.

"Because we've sold the licences we have to recognise the revenue and that flows into our corporate profit forecast, but that's not the same as profit coming into the business."

Zespri chairman Peter McBride said the licence release would not generate net cashflow until the 2018/19, 2019/20 and 2020/21 financial years.

"At that time the Zespri board will make decisions regarding use of funds and distribution to shareholders," he said, adding that the level of participation and the high median price of successful bids reflected strong confidence in the product.

Mr Jager said assuming an average yield per ha of 15,000 trays, the additional hectarage could generate an additional six million trays of G3.

Last season saw the largest-ever NZ volume of 27.5 million G3 trays sold, from a total Gold volume of 32.6 million trays. The new plantings are expected to take from two to four years to begin coming on stream.

"It's only prudent to release so much licence a year, because we have to develop demand," said Mr Jager.

NZ Kiwifruit Growers chairman Doug Brown said that given the level of interest the high prices were not that surprising.

"From our perspective it's really encouraging to see the level of interest in the release," he said.

However, Green kiwifruit still dominates the sector, with the most recent export crop reaching about 80 million trays and continued high yields.

Mr Brown said there was still good income to made growing Green.

New licences

Under the terms of the G3 tender, half the 400ha of new licence were restricted to Green and Green14/Sweet Green growers to provide an opportunity for existing Green growers to convert over to G3.

The other half was unrestricted and open to all growers and greenfield plantings.

Across the two tranches, there was only one successful bid for more than 10 HA, with 12 in the five-to-19 HA range, 47 in the two-to-five HA range, and 206 successful bids coming in for less than two HA.

The average successful bid size was 1.31 HA in the restricted tender and 1.77 HA in the open tender.

Zespri - 12 months results to March 1 2016

• Total sales revenue 2015 season: $1.9 billion (up 21 per cent on the previous year).
• Fruit and service payment to growers: $1.143 billion (up 22 per cent on the previous year).
• Net profit after tax $35.8 million (up $1.2 million on previous year).
• Current forecast for 2016-17: $70-$75 million.