Fruit quality costs expected to hit green kiwifruit growers hard in the 2022 returns season. Photo / File
Zespri’s big headache over New Zealand kiwifruit quality has worsened, with the global marketer warning green fruit growers could be in for a $35 million-plus hit in the pocket due to “much worse” fruit quality than expected in the season’s final shipments.
Zespri chief executive Dan Mathieson in a letter to growers said additional costs associated with the poorer green fruit quality were likely to be more than 60c 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 based on latest information the estimated cost was likely to be more than $35m for green growers and more than $1.5m for organic green growers. The next returns forecast is due on February 24.
In Japan, one of Zespri’s most important markets, the quality issue led to that country being undersupplied by more than a million trays.
“We understand how tough this will be for growers at the end of what has been a very hard year,” Mathieson said.
“Given the significant impact this has on green returns and the amount already paid to date for the 2022 season, we will not be proceeding with February progress payments for green and green organic growers and will reassess the impact on future progress payments once we have completed the February forecast.”
Zespri has been approached for further comment.
Zespri’s New Zealand kiwifruit growers were paid $2.4 billion in the 2021-2022 year. The average orchard gate return was $124,479 per hectare. But for green growers, many of whom have been struggling in recent seasons in comparison to gold fruit growers, that orchard gate return translated to $75,494 per hectare, and for organic green producers, $67,752 per hectare. In comparison, a grower of Zespri SunGold fruit received $176,000 per hectare.
Zespri’s total global sales - it also has overseas contracted growers - were more than $4b last year.
Zespri’s concern about New Zealand fruit quality has been growing in recent seasons as severe labour shortages in the sector and weather events continue to take a toll.
Mathieson said market demand for Zespri fruit had “remained as expected and we completed the 2022 season in line with previous years”.
“However, we have seen further deterioration in the fruit quality of our final vessels, particularly in the final shipments of our green varieties into Europe and Asia.
“These shipments arrived after our previous forecast (orchard gate returns) calculations were completed, with fruit quality much worse than anticipated, driven by higher fruit loss than forecast - both onshore and offshore - and higher quality claims.”
“Fruit loss” is fruit that landed in a market but was not considered fit for sale.
Mathieson said at the time of the previous returns forecast, fruit loss in Europe was estimated at around 7 per cent for the last quarter of the year.
Now it was nearly 20 per cent for this period.
Also, the amount of fruit that needed repacking before being sent to customers was around three times higher than the previous year. Repacking is performed by Zespri’s offshore staff.
“Quality claims from customers are also estimated to be nearly three times the level we experienced in 2021, and more significant than anticipated in the prior forecast.
“Higher fruit loss in New Zealand meant Japan was undersupplied by more than a million trays, with poorer fruit quality than anticipated in Japan also impacting our market mix.”
Mathieson said the news was a further reminder of the importance of the sector “addressing our fruit quality given the amount of value we have lost through quality costs....”.
Zespri last year launched a full-scale action plan on the quality issue, working with all industry stakeholders including growers and post-harvest operators.
Unsettled weather in recent weeks have added to the industry’s concerns. It is now hoping for sunshine through February and March to deliver a good 2023 crop.
Mathieson said as the industry gears up for the 2023 harvest, it must reset every part of the supply chain to ensure it delivers top quality fruit to markets this year and the years ahead.
“This is particularly important given the costs associated with fruit quality that we’ve seen throughout the 2022 season.”
Total Zespri sales volumes in 2021-2022 were 201.5m trays of New Zealand and non-New Zealand kiwifruit, an 11 per cent increase on the previous financial year. Global revenue generated by fruit sales increased by 12 per cent to $4.03b. Overseas-grown Zespri fruit were 26.5m trays, up from 23.5m trays the previous year, with revenue increasing from $472.8m in 2020-2021 to $537m in 2021-2022.