Zespri reduces gold fruit licence offer next year as it juggles pressures and growth demand

Zespri reduces gold fruit licence offer next year with the kiwifruit supply chain still experiencing constraints as demand for more gold fruit grows.

Zespri is reining in licences to grow its global best-seller SunGold variety next year as it tries to balance supply-chain squeezes with consumer demand for more of the fruit.

Chairman Bruce Cameron, who steps down in February, said a total of 250ha of SunGold brand licence would be released in 2024, a reduction from the 500ha signalled earlier.

There will be no release of growing licences for Zespri’s newly commercialised RubyRed fruit next year as the industry gets to grips with understanding the fruit’s performance in preparation for strong growth rates in future.

Zespri, which is entitled by regulation to export all New Zealand kiwifruit except to Australia, earned about $300 million from growing licence sales in FY23. SunGold orchard gate returns per hectare in 2022-2023 were $137.500, 22 per cent down on the previous season due to extreme weather events and fruit quality issues.

In an update to Zespri’s 2800 New Zealand growers, Zespri said 150ha of the SunGold growing licence release would be restricted next year to growers keen to convert from green Hayward fruit (which doesn’t need a licence purchase to grow), and 100ha would be available in an unrestricted SunGold offer.

Cameron will be succeeded Nathan Flowerday, a director since 2012.

Zespri said its expectation at this stage was to release licences for 350ha of SunGold in 2025, of which 200ha was for the restricted cutover use. The balance would be for the unrestricted SunGold pool. This was subject to review, improved quality and associated quality costs next year, and growers indicating they were prepared to expand.

From 2026-2028 Zespri had approved an indicative range of 350-500ha of SunGold licence per year. A portion may be available for the cutover from Hayward pool.

On red fruit growing licences, the company said new onshore packing and coolstore capacity needed to be built in the next two to five years to absorb growth of the variety. Post-harvest industry feedback suggested increased volumes and revenue were required to support that further investment.

In other developments, Zespri announced a first tranche of initiatives designed to strengthen grower shareholding in the company. Less than 48 per cent of growers own shares.

“There is a strong desire from the industry to make share trading easier, with growers keen to avoid shareholder initiatives that are mandatory or require large one-off payments,” Cameron said.

“There is a strong desire from the industry to make share trading easier, with growers keen to avoid shareholding initiatives that are mandatory or require large one-off payments.”

Growers would be offered the opportunity to receive their June loyalty payment relating to the 2024 harvest season as shares, and to reinvest dividend payments as shares. Both initiatives would be provided on an opt-in basis, with the January loyalty payment remaining a cash payment.

The board also confirmed Zespri would remain listed on the USX share trading platform and would seek to utilise a “continuous product disclosure statement (PDS)” to support future share issues and potential buybacks.

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.