“Catastrophic” and “unbelievably bad” is how one kiwifruit orchardist has described this year’s harvest, with some growers running at below the cost of production.
Packhouses have had machinery sitting idle because of the huge drop in volumes and one boss told NZME, “it’s hard for growers and really hard for us as well”.
The bleak news comes as Zespri’s 2022/23 financial results show its net profits plummeted by more than $120 million and returns per hectare (p/ha) on every fruit category had dropped. SunGold had fallen from $176,026p/ha in 2021 to $137,524p/ha in 2022/23 while Green had slid from $75,494p/ha to $57,636p/ha over the same timeframes.
Pāpāmoa kiwifruit grower Rob Thode said severe frost, flooding, and hail had decimated some crops.
“It’s been unbelievably bad. The season has been chaotic and a real mixed bag in terms of where things are at. Everyone is affected to some degree because the sunshine hours just haven’t been there,” Thode said.
Many growers were also running at below the cost of production, which was alarming alongside falling fruit volumes. Zespri expected its export numbers would drop to 136 million trays from 171m trays in 2022.
“You can see how catastrophic things have been,” Thode said.
He lost about half of his Kiwiberry crop but his other kiwifruit crops did okay, due in part to all the work that had been done on his property to mitigate climate change.
Te Puke kiwifruit grower Don Heslop said in his view, Zespri had done an amazing job in a tough season to get the returns it did in the market.
However, he said it had been a struggle and there were going to be “a lot of growers out there that are definitely hurting this year, with the income”.
Trevelyan’s Pack & Cool managing director James Trevelyan said its kiwifruit volumes were down by 20 per cent this year and he had personally lost half an orchard to frost.
“We built a lot of infrastructure to be able to process fruit and when the fruit doesn’t turn up, it’s tough. That [infrastructure] just sits there unutilised. So it’s hard for growers and really hard for us as well,” Trevelyan said.
Eastpack chief executive Hamish Simson said its kiwifruit volumes this season were also down by 20 per cent.
“It’s been one of the most challenging growing conditions in a long while and it has been extremely difficult,” Simson said.
However, the season affected growers differently with frosts, hail, and floods, he said.
“Some growers have been horribly affected and not only lost their crop but their entire orchard has been wiped out. There will be a lot of variation between growers depending on their personal outcomes.
“There will be a number that simply won’t have generated enough revenue from their crop because of these weather events. They are going to have to borrow more or put money in from other sources.”
The weather created more defects and more blemishes.
However, Simson remained optimistic about the industry because, internationally, it was a strong market.
“The international market would love to get a whole lot more fruit than we can currently supply them.”
Looking at the long-run average, 2023 was an anomaly, he said.
“It’s not all sunny days at the moment but we are a resilient industry. If we just go back to average yields for next year, we’ll have a significant increase in volumes.
“So we’re planning really hard on 2024 and figuring out how to do a really good job with that sort of bounce-back.”
New Zealand Kiwifruit Growers Inc (NZKGI) chief executive Colin Bond said the 2023 kiwifruit harvest has been one of the most challenging in recent memory with poor bud break and adverse weather, including cyclones and hail across the country, impacting growers’ yield.
This year’s poor season comes on the back of 2022′s quality issues, with an abnormally large percentage of the crop not making it to market.
“While some growers have retained a profitable business during the last couple of challenging seasons, many are hurting. The financial loss many growers are currently experiencing is creating pressure on both their businesses and wellness,” Bond said.
“Some growers are certainly struggling financially at the moment and will be speaking with their banks to stay afloat.”
Increasing orchard costs for labour and other expenses were already putting growers’ businesses under the pump.
“Growers have been working hard to ensure that the reduced yield of harvested kiwifruit leaves their orchard in optimum condition and are counting on the industry quality plan implemented at the start of the season to uphold the value of our fruit right through into the markets,” Bond said.
There was no doubt that the whole kiwifruit industry is experiencing huge pressures at the moment and NZKGI was embarking on research to ensure that growers and the industry structure was, and remains, robust for the future, he said.
Zespri’s 2022/23 financial results show its net profit after tax, including revenue from selling growing licenses, nosedived from $237.8 million compared to $361.5m.
Final grower returns had also plummeted per hectare across all fruit varieties. Zespri Green was $57,636 in 2022/23p/ha compared to $75,494p/ha in 2021/22. Over the same timeframes, Zespri Organic Green dropped to $60,912p/ha from $67,752p/ha, Zespri SunGold $137,524p/ha from $176,026p/ha, Zespri Organic SunGold $133,548p/ha from $143,772p/ha, and Zespri Sweet Green $41,761p/ha from $54,609p/ha.
Zespri CEO Dan Mathieson said in a written statement the results were indicative of a very difficult period for many primary industries, with growers facing challenges relating to the labour shortage, the ongoing impacts of Covid-19, the climate, and rising costs.
“This was one of our toughest-ever seasons and the industry worked incredibly hard to deliver our fruit to market, despite facing an extraordinary number of challenges, including a significant labour shortage,” Mathieson said.
He acknowledged the challenging period for growers, particularly Green growers, given the fact it also had lower volumes of fruit in the 2023/24 season.
“While conditions remain challenging, the first shipments of the 2023/24 season have been well received by our customers, indicating initiatives from the industry’s Quality Action Plan are helping reduce quality costs and keeping poorer quality fruit onshore.”
Data from the Reserve Bank of New Zealand showed horticulture loans, which included kiwifruit, hit $7.4 billion in March this year compared to $3.8b in March 2018.
A spokesman said the key risk factor for the business sector as a whole is the outlook for economic activity, and the potential for a large slowdown in demand as households reduced discretionary spending.
“Businesses continue to face a challenging operating environment. Input cost inflation remains high, and employment remains above its maximum sustainable level, contributing to high labour costs. Agriculture and commercial property stand out as business sectors where rising interest rates could lead to financial stresses, given these sectors’ reliance on debt-financed physical assets such as property,” the spokesman said.
“Signs of stress among some higher-risk property funds have already emerged.”
Zespri 2022/23 Financial results summary
- Global operating revenue: $4.22b (includes licence revenue)
- Gobal fruit sales revenue: $3.92b
- Total New Zealand-grown fruit and service payments including loyalty premium: $2.2b
- Global trays sold: 183.5 million trays
- Zespri’s net profit after tax: $237.8 million (includes licence revenue)
- Expected Total Dividends: $1.17 per share .