$20 million Central Otago cherry orchards plan

Photo: ODT files

Millions of dollars will be invested in developing cherry orchards near Alexandra and beside the Lindis River in the next few months.

In addition to new plantings, management companies are looking at building new infrastructure and possibly new accommodation for workers.

My Farm Investments head of investment research Con Williams said following a call for investors in early December, just over $11 million was raised from ''wholesale'' or experienced investors, although they were still looking for another $2.5 million to complete the investment.

''Although we had a short time frame [just before Christmas], we had a good response with 55 investors for the project.''

He said they intended to develop 80ha of a 96ha site into a cherry orchard at Waikerikeri Valley, and would start the project in autumn.

They intended to plant 72,000 cherry trees over the next three years at 900 trees per hectare.

About 10 varieties would be planted to extend the growing season and to spread production risks such as a frost event.

Mr Williams said fresh produce exporter Freshmax would manage the development and eventual operation of the ''Central Cherry Orchard Ltd Partnership''.

According to the investment brochure, investors were asked for about $13.5 million with debt and cashflow to provide the balance of the nearly $20 million project.

Mr Williams said investors could expect returns from the sixth year, which were expected to be about 10% pa on contributed capital and build to 32% pa from year 10.

Once the fruit started being harvested, they would use existing processing and packaging facilities, as well as existing irrigation and fertigation infrastructure, he said.

They might also consider building more water storage if it was required because of regulatory or climate changes.

He said attracting a suitably skilled seasonal labour force at the right times was a major problem.

To meet that need, they were looking at building accommodation for staff to use during the peak harvest season from December to February.

However, any decisions about what sort of accommodation was to be built, or whether they would use existing options, had yet to be decided.

Accommodation could range from purpose-built units on site or in Clyde or Alexandra, or they might consider working with existing providers.

''There might be a synergy in terms of accommodation options such as joint facilities with other providers.''

Mr Williams said any purpose-built accommodation might also be used by tourists as another income stream for eight or nine months of the year.

Another issue is the availability of air freight space.

''We could be hiring planes in five or six years' times if there is insufficient air freight capacity.''

He said New Zealand was a niche producer of high quality sweet cherries and targeted the Asian market, particularly during Chinese New Year.

New Zealand exported more than 4000 tonnes of cherries last season and Central Otago had produced most of that.

Southern Rural Life