KEY POINTS:
Bay of Plenty kiwifruit growers worried about breaking even this year were yesterday handed their own budget boost - the promise of nearly a 10 per cent increase in returns from marketing giant Zespri International.
Zespri, which announced a record $1.164 billion of global kiwifruit sales in the last financial year, surprised the industry by forecasting a rise in its fruit and service payments of between 45c and 85c a tray for the next 12 months.
The Mount Maunganui-based marketer is also raising its loyalty premium for class one export fruit to 15c a tray, from 10c last year.
Growers had been expecting similar returns to the previous two "depressed years", meaning an average orchardist producing the dominant green kiwifruit would hardly make any money on his business. Another 50c a tray, for instance, would give the orchardist a reasonable profit margin.
Zespri chief executive Tony Nowell said the latest forecast would be "keenly welcomed, quite frankly. The growers deserve more money - they have produced a product mix that has enabled us to achieve better prices.
"I would hope that the growers can see a future, particularly with green kiwifruit. There is already a great future for gold and organic kiwifruit."
Mr Nowell expected the increased pay-out would lead to further investment in orchard management, such as winter pruning and vine maintenance, so there is an even better crop next year.
Zespri's positive forecast was based on an improvement in the exchange rate with the Japanese yen and euro, savings from on-wharf inspection, and higher prices for the bigger fruit, particularly in the Asian markets.
Zespri had also shipped six million more trays than the same time last year on the same number of ships. But the forecast was still burdened by increased shipping and post-harvest costs.
Graham Wiggins, president of New Zealand Kiwifruit Growers, said the forecast was encouraging but only an indicative figure.
"Zespri is prepared to put a stake in the ground, which is great, but we are only halfway through the packing season. We don't know all the related growing and post-harvest costs until we get an independent audit," he said.
Mr Wiggins understood that labour costs, for instance, had risen to 66 per cent per orchard after the government raised the minimum wage to $12 an hour.
He expected some improvement in the predicted returns since the NZ dollar had eased 9 per cent against the euro and 8 per cent against the yen since March.
And he praised growers for playing their part and producing larger average sized fruit for which consumers were happy to pay higher prices.
Zespri announced an indicative range of $6.75 to $7.15 a tray for green kiwifruit growers in the year ending March 2009, compared with an actual return of $6.30 a tray in 2007/08.
It will announce a more definitive forecast in August, once the bulk of the packing and selling season is completed.
Zespri also announced a net profit of 19.7 million for 2007/08, compared with $22.l million for the previous year - a fall of 11 per cent as it lowered its margin on net sales and net returns to grower from 7 to 6 per cent.
Its global kiwifruit sales increased 3 per cent from $1.125 million to $1.164 million for the year ending March 31, and fruit and service payments rose 1 per cent to $660.5 million, from $654.3 million. Zespri also made $4.7 million gross profit for the sale of Gold licences.
Mr Nowell said last year Zespri had record sales volume across the Asian markets, But there was increasing competition from Chile in the European markets.
Zespri is paying a final dividend of 33c a share in August, combined with an interim dividend of 35c and a special of 12.67c - a total payout of 80.67c a share.
- BAY OF PLENTY TIMES
