Micheal Franks CEO of Seeka. Photo/file
Seeka Kiwfruit Industries has reported its second consecutive year of well above industry average Orchard Gate Returns (OGR) for its avocado growers.
To date, returns for the 2014-15 season have Seeka's avocado growers being paid out an average OGR of $16.03 per export tray with further payments projected of about $0.30 per export tray, which are likely to be at the top of the sector's returns.
In the 2013-14 season, Seeka orchards' average yield was 12.3 tonnes per hectare, giving a total OGR of $45,862 per hectare. That was more than twice the industry average OGR of $20,721 per hectare reported in the Avocado Industry Annual Report.
"We are a boutique company in terms of avocados," said Michael Franks, chief executive of Seeka.
Seeka is New Zealand's biggest kiwifruit grower and a leading post-harvest operator and premium produce company.
"But the strategic advantage for our growers is we are fully integrated from orchard to market," said Mr Franks.
"We control our supply chain and, as this year's returns confirm, we are very effective at managing our supply of fruit to maximise pricing for our growers. Seeka is also transparent in the way we report on costs and returns, so that growers can readily access full data on their OGR."
Mr Franks said Seeka was smaller than some avocado exporters in the sector and had therefore chosen to focus its efforts on Australia, where it had an established presence through its SeekaFresh branding. This year's domestic Australian crop was down on projections and Seeka had managed supply with its growers to ensure it had sufficient fruit available for the Christmas/New Year period where prices were highest, he said.
SeekaFresh Manager Annmarie Lee said controlling the supply of fruit from orchards was the key to maximising returns for growers.
"We only supplied fruit to the market in response to our customers' demand," she said.
"We targeted the periods where we thought there would be the most value in the market. Our approach results in maximum market returns, while maintaining high quality standards. And we were very disciplined and responsible, to ensure we didn't compromise the price for other New Zealand avocado exporters."
Seeka's avocado business manager Dr Jonathan Dixon said in order to keep grower costs down and increase their returns, Seeka strip-picked. That means it takes all harvestable fruit from each of its growers at one time, rather than part-harvesting each orchard two or three times throughout the year, as is the case with other avocado companies.
"Seeka is focused on controlling harvesting costs for best grower returns," said Dr Dixon.
All grower fruit goes into a pool to mitigate pricing variations throughout the year. In addition, this season Seeka continued with its innovative late season premium for growers whose fruit was scheduled to be picked near the end of the season when - although prices in the market were higher - there was a greater risk of losses because fruit had spent longer on the trees.
Simon Wells, General Manager Grower Services, said Seeka was continually innovating to consistently deliver high quality fruit to customers and improve returns for its growers.
"We are committed to helping growers improve their yields," he said.
Seeka growers' average yields rose from 12.3 tonnes per hectare in 2013-14 to 12.9 tonnes per hectare in 2014-15. Mr Wells attributed the improving yields to hard work by Seeka growers and strong technical support from Dr Dixon, an internationally recognised avocado expert.
"It's not just about OGR, but also about how many trays you're getting that OGR over," said Mr Wells.