Zespri lifts lower end of orchard returns guidance for gold kiwifruit. Photo / Supplied
Zespri lifts lower end of orchard returns guidance for gold kiwifruit. Photo / Supplied
The kiwifruit harvest season in New Zealand continues to set records but signs of fruit price-cutting in the industry's biggest market China is among Covid-19 risks globally, says marketer Zespri.
The company, which has the statutory right to export most of New Zealand's kiwifruit crop, has increased returns guidanceto grower-suppliers on the back of the promising start to the season but the good news is laced with warnings about risk.
In an update to growers, Zespri chief executive Dan Mathieson said indications in China of reduced pricing of other fruits, local and imported, could influence Zespri's selling price there.
"China trade is recovering but there is variability in the pace of recovery between [sales] channels and in different cities or regions. Risks also remain around the final size profile for green [kiwifruit] and potential future disruption in the supply of green to the market."
Mathieson said the $3 billion export industry's hard work and innovation in the Covid-19 emergency had enabled it to make a record start to the amount of fruit picked, packed and shipped.
The Mount Maunganui-based global marketer as at April 23 had increased its orchard gate returns guidance for key fruits Zespri green to $5-$6.50 from $4.50-$6 a tray, and for Zespri gold to $9.50-$11 a tray, up from $8.50-$11 earlier in the month.
Early sales in Japan and China had been positive and strong demand for fresh produce was continuing in other key markets, including the EU, which were now receiving New Zealand kiwifruit, Mathieson said.
In-market supply chains were disrupted by Covid-19 but continued to work well.
But risk remained, he said.
Strong demand for fresh fruit, particularly sources of vitamin C, was a good signal but had to be tempered by wider concerns around global consumer buying power being hit by world economic turmoil, competition, changes in buying behaviour and fewer shoppers in stores and changes to fruit trade flows through sales channels.
Also still looming was the risk of significant disruption across Zespri's global supply chain, he said. This could include markets closing down, key ports shutting, internal market transport being heavily restricted and large-scale population movement controls that will affect consumer ability to buy fresh fruit.
Dan Mathieson, chief executive of kiwifruit marketing company Zespri. Photo / Alan Gibson
In late March as New Zealand was locked under in a Covid-19 level 4 emergency response, Zespri told the Herald $4.5b of global sales by 2025 remained its goal.
But the company acknowledged considerable uncertainty about Covid-19's impact on the global fresh fruit economy.
Before the virus pandemic, Mathieson said sales revenue this financial year - excluding income from selling growing licences - was forecast to pass $3b.
At that time the big goal of $4.5b was considered achievable before 2025 "if all goes to plan".
The New Zealand kiwifruit industry has been deemed an essential service during the lockdown.
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, Zespri chairman Bruce Cameron has said the company had arranged extra banking cover for this season and was keeping its dividend policy under review.
Zespri is planning to ship 155 million trays this year.
