Rockit apple grower Rākete Orchards has gone into voluntary administration. Photo / Supplied
MyFarm Investments’ partnership Rākete Orchards, which grows trademarked Rockit apples, has gone into voluntary administration.
A filing with the Companies Office says George Bannerman and Rees Logan from accounting firm BDO Auckland were appointed administrators on Monday by the company’s board.
In a statement, Rākete Orchards chair Tony Hawken blamed low orchard returns for the move.
“When selling a specialised product at a high price point, a business needs to invest in the market to drive demand ahead of supply,” he said.
“For the past two seasons, demand hasn’t grown sufficiently.
“This fact, coupled with high supply chain costs, has meant orchard gate returns have been insufficient to support investment in next year’s crop,” Hawken said.
MyFarm - an agricultural land syndicator - said Rākete is a lease syndicate with six orchards in Hawke’s Bay.
The firm’s website says Rākete’s assets, worth $17.4m, cover a land area of 62.6 ha.
In a statement, Rockit, which markets its apples in distinctive plastic tubes, acknowledged the challenges faced by Rākete Orchards and its decision to appoint a voluntary administrator.
“We recognise the past few seasons have placed pressure on many Rockit growers, and we remain committed to supporting the grower community as we work to deliver our turnaround strategy,” chief executive Grant McBeath said.
“Rockit has taken proactive steps to improve orchard gate returns (OGR) and restore long-term value for all stakeholders,” he said.
“Rockit’s focus is getting demand ahead of supply and improving OGR by delivering the season, improving our supply chain and simplifying the business.”
Grower outcomes in recent years had not aligned with expectations, he said, adding there were factors beyond Rockit’s control including the historical impact of Cyclone Gabrielle and the more recent economic downturn in China.
Rockit was asked specifically by Rākete Orchards for support but believed that prioritising the entire “ecosystem” would be more beneficial for all growers.
“Faced with the choice between investing that capital into initiatives that benefit all growers, or prioritising a single grower, Rockit made the difficult decision to focus on the broader grower network,” McBeath said.
“While we regret the situation Rākete finds itself in, our responsibility is to act in the best interests of all Rockit stakeholders,” McBeath said.
Rockit sells licences to grow the small apples to growers and then sells the produce on their behalf.
Rockit Global, based in Havelock North, has the global and exclusive licence to grow and market Rockit apples.
The company, which is owned by private equity companies Pioneer Capital and Oriens Capital, along with Punchbowl Investments, has had a string of CEOs over recent years.
Nic Lees, senior lecturer in agribusiness management at Lincoln University, said that with Rockit representing about 10% of the national apple crop, other growers will be feeling the impact of lower prices.
Among the licensed varieties, Rockit’s share would be much higher than that.
“A lot of growers bought into what they saw as the potential for the Rockit apple, which just hasn’t really eventuated,” Lees told the Herald.
Rockit Global initially projected a $1.50 per tube price, which was later revised down to just 60c, he said.
“If Fonterra was predicting $10 a kilogram milk solids and suddenly came in with a $4.00/kg milk price, you’d be really wondering where they were basing their forecasts,” he said.
Lees said there were shades of the kiwifruit industry a few years ago, when there was too much supply and not enough demand.
“Sadly I think growers have kind of bought into it and believed in the marketing perspective,” he said.
“The key message is that if you are pushing a high value product, you need to be able to manage demand ahead of supply, otherwise it just pushes your price down.”