Covid 19 coronavirus: Kiwifruit export season off and running hard for us

Strong demand for New Zealand kiwifruit continues in key markets. Photo / Supplied

Some good news in a bleak time from New Zealand's $3 billion kiwifruit industry - the export season is off to a record start, shipping smooth so far and early sales in the key China and Japan markets positive.

In an update to growers, Bruce Cameron, chairman of global exporter and marketer Zespri, said the industry was off to a record start in the amount of crop picked, packed and shipped.

There were no issues around its charter ships in China, Japan, Taiwan and Korea. Ports in Europe were all reporting normal operations, he said.

Fruit arrival in markets had been among the earliest ever, and strong demand for fresh fruit, particularly sources of vitamin C, were great signals, Cameron said.

Based on what it knew today and how it saw the season progressing, the Zespri board believed it was likely to pay a dividend to growers this year, he said. Zespri had also lifted the bottom end of its forecast range of returns to growers.

The kiwifruit industry is deemed an essential service in the New Zealand Covid-19 response.

However as the International Monetary Fund forecasts global GDP to fall by 3 per cent this year, the biggest drop in almost a century, Cameron tempered this advice to growers and the board's positive outlook.

Risk from the global virus pandemic remained, he said.

Strong demand for New Zealand kiwifruit continues in key markets. Photo / Supplied

"Even with the positive start to the selling season, we want to see how sales continue in China and Japan and how they start in the EU and our other markets, which have yet to receive fruit or begin their sales programmes.

"Strong demand for fresh fruit ... must be tempered with wider concerns around global consumer purchasing power being negatively impacted by the global economic turmoil and changes to the normal flow of fruit trade ...

"There also remains the risk of significant disruption across our global supply chain. This could include loss of industry capacity, markets closing down, key ports shutting, internal market transport being heavily restricted or large-scale movement controls on populations that would prevent their ability to purchase fresh produce."

Cameron said any of these issues would affect Zespri's ability to achieve its forecasts which would pressure outlined grower returns. The board could decide not to pay a dividend in August if it was not prudent at that time.

"While the situation is developing rapidly, we believe the best-case scenario is that we will experience at least some disruption across our distribution network.

"However given strong demand for fresh fruit, the potential impact of this level of disruption on [grower returns] will be a lesser risk at this point in time."

Kiwifruit is New Zealand's biggest horticultural export. In the year ended March 2019, Zespri sold 167.2 million trays of fruit globally, almost 149 million of which were grown here, bringing in $3.14b in sales revenue and licence fees.

Given the uncertain environment, Cameron has said the company had arranged extra banking cover for the coming season and is keeping its dividend policy under review.

Zespri is planning to ship 155 million trays overseas this year, in more than 18,500 containers and 47 charter vessels.

As of Tuesday, the industry had packed 33.5 million trays of gold fruit and 10.7 million of green fruit.

NeedToKnow3

• Covid19.govt.nz: The Government's official Covid-19 advisory website