Industry to face truth about apples

By Philippa Stevenson

agricultural editor

An agonising analysis of what has gone wrong for New Zealand in export apple markets has just begun, but the truth may already be in the bag.

"You can't put everything in the box and expect to sell it at a profit," said Enza chief executive Gary Smith.

Signs were that this lesson was being learned in South America - where Chile was said to be pulling out trees - South Africa and Washington state.

"We are faced with global overproduction and there is a significant wake-up call coming through in season 1999 for all producing countries, both in northern and southern hemispheres, that continued production of unconstrained volume is only going to lead to one outcome. That is falling prices, and ultimately [low] returns back to growers."

In a market report, Enza said the key to the year had been the increase of traditional New Zealand varieties within competitors' crop mix.

"For example, official statistics for red-apple exports to the United States from Chile, as at July 25, show that 63 per cent of total imports were royal gala and braeburn. With the addition of Fuji, that figure increases to 94 per cent."

By July 25, Chile had exported 850,000 cartons of royal gala to the US, up 28 per cent on last year. Enza planned total sales of 1.1 million cartons, so Chile had already put on the market 70 per cent of New Zealand's volume.

Braeburn and fuji varieties were similarly affected.

"New Zealand no longer holds the high ground with these varieties in key world markets," said Enza. "Our competition is now exporting greater volumes, earlier and at much lower prices. Adding to this situation has been the increase in Washington domestic stocks in the US market, which has particularly affected braeburn sales."

Other factors included a retail environment that was extremely flat.

"There is no life in the apple category whether in the United Kingdom, the Continent or North America."

Stagnation in consumer purchasing and cheap alternatives had affected consumption. "For example, bananas are selling in Europe at half last year's prices."

Mr Smith also warned that the industry should take other factors about the season into account.

"Take out braeburn, and we have defied gravity in a number of senses. Our performance on, particularly, the large-volume varieties has been quite commendable, but it has unfortunately been masked by the relative performance of braeburn. Because of its industry weighting it has weighed down industry averages."

Pipfruit Growers deputy chairman Phil Alison is prepared to accept Enza's explanations.

"We can enter into agreements but if supermarkets can't sell, we, at the end of the chain, are left with the problem.

"The only thing we can do is maintain the brand, invest in the market and maintain the quality. Even this year we are earning a huge premium compared to our competitors."

He said one consolation for New Zealand growers was that "although we are hurting, some of the prices our competitors are getting are a lot less. There will be a shake-out."