The kiwifruit industry's crippling labour shortage is easing, says marketer Zespri. Photo / File
The kiwifruit industry's crippling labour shortage is easing, says marketer Zespri. Photo / File
Zespri’s kiwifruit growers weren’t the only ones under pressure in a tough 2023 financial year - their global marketing company also struggled and dropped the ball, its leaders say.
Both Zespri’s chair and chief executive told the exporter’s annual shareholders meeting that the company wasn’t always at the top ofits game in a 2022-2023 season marred by severe weather events and supply chain issues. The results included highly costly fruit quality problems, smaller crops and lower earnings and returns. The legacy of Covid-linked labour shortages underpinned much of the difficult year.
Zespri has the statutory right to export all New Zealand kiwifruit, except to Australia.
Chief executive Dan Mathieson said the Zespri team was “under enormous pressure last year and we didn’t get everything right”.
“We know this led to frustration amongst growers and within the industry...
“Our systems were not set up to handle the volume of quality claims we were processing. Operationally, we struggled to respond well enough in Europe and other key markets to the significant quality challenges.
“Despite the circumstances, we will learn from last year, knowing there are things we could have done better and systems we can improve. And as a business operating in an increasingly complex environment, that will continue to be our focus.”
Fruit quality losses and issues cost Zespri $534 million in FY23, meaning it had half a billion dollars less to return to growers.
Chair Bruce Cameron said that in challenging times, growers expected Zespri “to be at the top of our game”.
“And I want to acknowledge that we haven’t always met our own expectations.”
Cameron said Zespri had taken lessons from the year.
The importance of resolving the fruit quality issue could not be underestimated, he said.
“Firstly, it’s money removed from our pockets. The cost of quality last year was $2.56 (per tray) for green and $3.44 per tray for Sungold kiwifruit. Capturing that would have significantly strengthened the position of growers entering another challenging year.
“Secondly, it puts at risk the reputation of our kiwifruit and the Zespri brand - something which underpins the premium growers receive in market. While we still have some way to go to return these costs to a more appropriate level, we’ve made some good progress.”
Unfortunately, much of the complexity and uncertainty that marked last year would remain, Cameron said.
“The climate is changing. We can all see the impact it’s having on our growing season and our ability to live up to our quality standards. We are going to have to adapt to this.”
“There are more barriers than ever before and while there’s been some real success with our officials opening new markets, it is getting harder.”
Geopolitical competition was increasing, as was market competition.
“And the world is getting more expensive and uncertain. All of which we must respond to - and I have no doubt we can.”
Both Cameron and Mathieson called for the industry to unite and be proactive in the face of these challenges.
Mathieson said while the scale and structure of the industry was a strength, it had to work well in order to respond and maximise value and protect the sector.
To this end, Zespri was looking at three core areas: tactical responses to be implemented now to maximise grower returns; designing an appropriate supply chain; and longer term, making an innovation investment to create new sources of value and responses to challenge.
Mathieson said a big focus of early work had to be the future of green fruit.
Grower advocate, NZ Kiwifruit Growers Inc, has reported many green growers “are in financial pain”.
“We need to lift all grower returns ...but we need to acknowledge the pressures our green growers in particular are feeling from increasing costs, greater competition, pricing pressure and reduced yields,” said Mathieson.
“While some green growers are doing well, it’s become especially hard for growers who produce less than 10,000 trays a hectare.
“We remain confident that if we can get the right volume of good quality green through to our markets, we can sell it for good value.”
However, Zespri was also focusing on commercial development of new green cultivars.
On a brighter note, Mathieson said kiwifruit had moved up the fruit bowl rankings from 9th to 7th place in Zespri core markets.
Kiwifruit was becoming increasingly preferred in two key growth markets, North America and Vietnam, moving from 17th to 15th place, and 20th to 12th respectively.
Six markets were targeted for faster growth - the UK, Switzerland, Portugal, India, Indonesia and Malaysia, where sales volumes were expected to double in the next decade.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
