Cyclone Gabrielle: Under-pressure kiwifruit export industry counting the costs

Cyclone Gabrielle risks acutely sharpening the financial pain of kiwifruit growers in the $2 billion New Zealand export industry, already struggling with the cost of fruit quality issues due to previous weather and a severe labour shortage.

The cyclone has hammered New Zealand’s prime kiwifruit growing areas of the Bay of Plenty, Northland and the East Coast, and with the annual harvest due to begin next month, the sector’s leaders are trying to get a handle on the extent of any damage to orchards. The top of the South Island is another kiwifruit growing region which could be in line for the lash of the cyclone.

Colin Bond, chief executive of New Zealand Kiwifruit Growers Incorporated (NZKGI), the organisation that represents the country’s 3000-or so growers, said “some extent of impact” is expected as the cyclone continues to travel across most of New Zealand’s kiwifruit growing regions.

“While our thoughts are with impacted growers, the cyclone’s full extent is unknown at this time as the situation continues to evolve,” Bond said.

“NZKGI also recognises that some growers continue to deal with the recent flooding from the beginning of this month.

“Roots of kiwifruit vines that are underwater from floods for extended periods of time suffer from oxygen starvation which can ultimately kill the vines.

“In addition, there is also a wider concern with the recent climatic conditions, including lack of sunlight hours, [that] may impact on fruit growth as harvest approaches.

“Assessments of the extent of any impact that these issues may have on this year’s harvest, which is expected to begin in the coming weeks, are currently being made.”

Marketer Zespri, the main exporter of New Zealand kiwifruit and the world’s biggest marketer of the fruit, paid domestic growers $2.47b in fruit and service payments last year. The New Zealand company also has contracted fruit growers overseas. Its total global net sales were $4.07b in the 2021-2022 year from 201.5 million trays.

Zespri has been approached for comment on the impact of the cyclone.

The sweetheart New Zealand export industry has been plagued by fruit quality problems in the 2022 season.

While the costs of weather-impacted softer fruit and handling issues due to a shortage of 5000 workers in the sector’s supply chain are expected to hit the pockets of growers of all varieties, including the best seller SunGold, green fruit growers have already been warned by Zespri they could be in for a $35 million hit this year.

Zespri chief executive Dan Mathieson has said additional costs associated with the poorer green fruit quality were likely to be more than 60 cents per tray for growers of green fruit and 50c per tray of green organic.

The amounts had still to be finalised but the Mount Maunganui-based company said that based on the latest information, the estimated cost was likely to be more than $35m for green growers and more than $1.5m for organic green growers.

In Japan, one of Zespri’s most important markets, the quality issue led to that country being undersupplied by more than a million trays.

More detail about the financial impact of the fruit quality and the associated cost issues for gold fruit growers, and the full impact for green fruit producers, will be known on February 24 when Zespri gives its latest returns forecast from the 2022 harvest.