Kiwifruit being loaded for Japan at Port of Tauranga. Photo / Alan Gibson
Kiwifruit being loaded for Japan at Port of Tauranga. Photo / Alan Gibson
It may take up to three seasons for the export sweetheart kiwifruit industry to overcome a serious fruit quality problem that is forecast to cost growers more than $400 million in losses this season.
Dan Mathieson, chief executive of export marketer Zespri, said it may take two to three seasonsto move past the issues, but a strength of the industry, which recorded $4 billion-plus in global sales last year, is that when it bands together on a problem, it will overcome it.
(The sector recovered strongly from the vine disease Psa which swept through orchards in 2010, destroying whole livelihoods in its first New Zealand incursion.)
Zespri's annual meeting this week, where Mathieson bluntly delivered the message that the quality of fruit sent to export markets this year was the worst in 20 years and customers were upset, heard the forecast loss cost of star variety SunGold this season would nudge $290m, compared with $168.1m last season. The forecast green fruit loss cost of $120m is lower than last season, but at a loss of $1.95 per tray compared with $1.65 last year, it is still very material to green growers struggling to make a profit with orchard costs inflation.
The forecast loss cost for the newly commercialised Zespri RubyRed variety is $239m or $2.13 per tray.
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Mathieson told the annual meeting quality loss costs had gotten "progressively worse over recent years".
Forecast grower returns for the 2022-2023 season are also well down on last season.
Mathieson told the meeting one of the areas Zespri was reviewing "to take pressure off" growers was licence release. Selling licences to growers is a lucrative income for Zespri. Licence income last financial year was $436.7m. The green (Hayward) variety does not require a licence, having been commercialised in the 1950s.
But talking later to the Herald, Mathieson downplayed the role of licensing in the quality issue.
Asked if Zespri had licensed too much kiwifruit for an industry too severely constrained by a Covid-fuelled labour shortage to handle harvests properly, he said the licence offer was reviewed every year to ensure demand stayed ahead of supply, and last year Zespri had reduced new licence coverage from 700ha to 350ha.
This was because it had forecast stronger yields and was taking into account early signs of capacity constraint within the industry. This year those constraints had increased, he said.
Dan Mathieson, Zespri chief executive. Photo / Alan Gibson
Mathieson said his notice to the meeting that Zespri would announce changes to the licence allocation "mechanism" and the number of hectares available for 2023 "should not be taken as tied to fruit quality".
Zespri reviewed this mechanism every year with frequent changes, he said.
"What is more attributed to fruit quality is how much licence we put out going forward, taking into consideration the demand and supply sides of the business and building markets in preparation for that supply.
"The severe labour shortages of the past couple of years have led to a lack of confidence in some of our industry partners (post-harvest operators) to continue to invest in building capacity."
Zespri is entitled by statute to be the main exporter of all New Zealand kiwifruit, except to Australia.
Asked if Zespri took any responsibility for the serious fruit quality issues this year, Mathieson said: "We have to look at how much fruit we licence going forward. As I said, we make those decisions based on supply and demand."
He noted licence decisions were made two years before the fruit comes online.
Asked if a better labour supply would solve the quality problems, he said "it will absolutely help".
If it would just "help", what else was needed to fix the problems?
"We need to look at what caused the issues this year. We have seen really soft fruit at harvest, we need to look at the cause.
"Some of it may be climatic, some may be yields getting ahead of the focus that needs to be on quality. That will be looked at over the next few weeks and months and responded to as things become clearer."
Mathieson said he had not been contacted by the Government or ministers over the issues, which he told the meeting were damaging the brand and reputation for quality the New Zealand industry had spent $1.5 billion building.
"I would really like to say we are really confident we can make changes. The industry is really focused on this and it will be a pan-industry approach and it will be focused.
"We have also had some good fruit go out this year - we've just seen a lot more variability."
