Zespri warns of coronavirus disruption risk

Kiwifruit marketer Zespri has signalled the risk of low returns to growers this season as it tries to assess the potential for disrupted deliveries in global markets and picker shortages here.

The firm, which this week dispatched its first cargo of SunGold fruit this season, said demand for fresh fruit is good and that that may help it weather the coronavirus disruptions it expects.

But it said the board's best-case scenario assumed "at least some disruption across our distribution network." Covid-19 is also impacting labour supply here, but chair Bruce Cameron said it was too soon to say how big an impact that will have on the industry's ability to pick and pack this season's crop.

Last month, Zespri forecast final orchard gate returns for the 2019 selling season at $6.46 per tray for green fruit and $11.71 for gold fruit.

Yesterday, it forecast prices of $4 to $6 for green for the 2020 season and $7.50 to $11 for gold. Its early season forecasts for those varieties usually come in a $1 range.

Cameron said the broader than usual range on forecast orchard gate returns – OGRs - reflects the potential risks Covid-19 poses, the greatest of which would be widespread disruption across the company's global supply chain.

That could include loss of industry capacity, the closure of key ports or markets, heavy restrictions on internal market transport, or large-scale movement controls that stop people buying fresh produce.

"Any of these issues will impact on our ability to achieve our planned run rates which will put pressure on achieving OGRs within the range outlined," Cameron said in a statement.

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 $3.14 billion in sales revenue and licence fees.

Last month, it forecast a March-year profit range of $187 million to $190m and dividends of up to 89 cents a share.

Given the uncertain environment, Cameron said the firm 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.

Blair Hamill, chief global supply officer, said 32 of those charters are destined for Asia, 11 for the Mediterranean and four to northern Europe.

He said ports in Japan, Korea and Europe are functioning well and have plenty of labour.

Consumer metrics in China are improving and the firm expects its charter services there to run as planned, he said.

"We'll continue to monitor the developing Covid-19 situation closely," he said. "If we see any change in demand or disruption to a port, we will make adjustments to our fruit allocations accordingly."