Wellington - Kiwifruit marketer Zespri says the soaring New Zealand dollar will reduce grower returns by up to $1.60 per tray in the current season.
Zespri, which controls a quarter of the world's commercially tradeable kiwifruit, said it was unlikely to repeat last year's return to the industryof $654 million because of the currency, despite strong sales.
The New Zealand dollar has been climbing swiftly through post-float highs towards US80c on the prospect of rising interest rates. As a result, Zespri estimated grower returns would fall by between 75c and $1.60 per tray for 2007/08.
"We will seek to mitigate that through continual improvements in our price premium and by cutting costs, but we expect this will be more challenging this year with a considerably larger crop and increasingly aggressive competition," Zespri chief executive Tony Nowell said in speech notes for yesterday's annual meeting.
The company needed to cut $30m in supply chain costs, he said.
Zespri focuses on exporting high quality fruit with a price premium of up to 40 per cent, but is facing the threat of increasing production from China and higher quality kiwifruit from Europe and Chile.
Last year's return to the industry rose by $77m despite unprecedented domestic fruit losses, because of foreign exchange hedging gains and the price premium.
Last year, growers received $5.86 per tray for green kiwifruit, $7.68 for organic green fruit and $7.31 for gold fruit.
Shareholders at the AGM also approved the investment this year of $2.3m in developing new cultivars, and $800,000 in research and development in products derived from kiwifruit, such as fruit extracts.
