Tax bill dents record payout

By PHILIPPA STEVENSON

A $3.7 million Japanese tax bill carved a thick slice off kiwifruit returns, but did not stop a record payout to growers in a year marketer Zespri has claimed as a milestone.

The sole kiwifruit exporter said a crop that was 14 per cent smaller than the 1998-99 harvest also left it "unfazed" in the landmark year.

Zespri reported a net surplus of $413 million on sales of $650.7 million, netting growers a return of $7.62 a tray, 17 per cent up on last year's $6.50 a tray.

In the annual report, chairman Doug Voss said 1999-2000 had been "a signal year for our industry. We've made huge progress, lifting our financial returns to growers to new heights while steadily progressing our strategy to expand into a 12-month business with guaranteed year-round supply."

In April, the company had forecast a pre-audit return of $415.5 million but settling a long-running taxation dispute in Japan the same month had reduced the figure, Mr Voss said.

While the final return was down by $2.5 million on the forecast, the total impact of the settlement with Japanese tax authorities was a reduction of post-tax earnings of $3.764 million, which included interest, penalties and amounts previously recognised in the financial statements, the company reported.

Mr Voss said the dispute was over the degree to which Zespri runs a business in Japan and the settlement covered several seasons. The company now had a clean slate with the Japanese Government.

The present selling season, under way for just a few weeks, looked promising, and after last year's milestone "the key is to aim for consistency in our performance, to give our industry, growers and suppliers the confidence that we can maintain a reasonable return out of the market," Mr Voss said.

In three years, orchard gate returns have climbed from $15,386 a hectare to $27,898, which has encouraged new investment in the industry whose crop volumes have been steadily sliding.

Mr Voss said there was no "gold-rush mentality" in the renewed interest in kiwifruit.

"It is people making very sound and reasoned investment decisions based on the land they have available in their existing interest in the kiwifruit industry. It is a steady build-up, not like the rushes of plantings we had in the late 70s and early 80s," he said.

"It is a very measured process but it underpins the confidence we have in the business at present."

Zespri was excited about the prospects for the bumper crop of around five million trays of the new Zespri Gold kiwifruit, which it owns exclusively and which was having its commercial launch this year after two years of test marketing, he said.

Initial supplies into Japan had gone well and there was "plenty of room for expansion" when the gold-fleshed fruit hit Zespri's main market in Europe.

While other fruit, such as apples, were already seeing price reductions in markets again awash with fruit, New Zealand kiwifruit was expected to maintain its price.

"In our season we are 70 per cent of the market; so we have a dominant position," Mr Voss said.

"It's an everyday fruit now, and we have [Zespri] gold which no one else has to put us in an even stronger position."