Solid Returns Expected for New Zealand Kiwifruit Growers

Media Release - 18 August 2010

ZESPRI is forecasting increased per-tray returns across all categories for New Zealand Kiwifruit growers, on the back of an excellent in-market response to this season’s ZESPRI® Kiwifruit.

Patchy pollination in some areas and a very dry 2010 New Zealand summer resulted in lower-than-anticipated yields of ZESPRI® Kiwifruit and a larger quantity of smaller fruit earlier in the season. But, says ZESPRI Chief Executive Officer, Lain Jager, there was some upside to the dry summer conditions.

“The dry, warm growing conditions have provided us with a great tasting crop and this is translating into strong market demand, particularly in more taste sensitive markets,” said Mr Jager.

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At this relatively early stage in the season it appears that strong sales and lower than usual fruit loss will offset a 34 percent increase in bunker fuel rates, leading to projected fruit and service payments across all pools of $856.2 million – a $22.3 million increase on last season.

Mr Jager noted the modest improvement in GREEN returns would be heartening for GREEN growers who have been under significant financial pressure in recent years following strong volume growth, deteriorating market mix and rising costs depressing returns for the category.

“We are providing a very high quality product to the market and this improvement in returns is important to sustain the category going forward. While the average per-tray return in all pools has increased, it’s important to note that in a high taste year, some growers with smaller fruit and lower dry matter levels, or with lower yields, may actually have reduced returns per hectare,” Mr Jager said.

In reflecting on market conditions Mr Jager noted some markets were recovering from recessionary impacts more quickly than others but, in general, demand was stable or growing across ZESPRI’s markets in all categories.

“It’s important to recognise that good business in the fruit industry is about reliable quality and long-term relationships with distributors and retail customers. Our focus is really on delivering that reliable quality, supporting our programmes with effective promotion, and extending our range which is good for all of our partners because it delivers a stable and growing business for the future.”

Mr Jager said that the last GOLD Kiwifruit were shipped to Japan in early August, with the final GREEN and GREEN ORGANIC Kiwifruit to be shipped to Europe and Asia by the end of November.

Growers have been invited to attend meetings around the country, beginning next week, to discuss the latest forecast.

Interim ZESPRI® Taste payment to be paid in September

ZESPRI is paying the Taste payment earlier – by bringing forward half of the 15 November ZESPRI® Taste payment (approximately $34.9 million or $0.35 per TE) to 15 September.

The Taste ZESPRI® Programme ensures customers consistently receive delicious kiwifruit by providing payment incentives to growers who produce great-tasting kiwifruit. ZESPRI works with growers to provide orchard management tools and research that can help improve dry matter levels in kiwifruit - a key indicator of great taste.

The early Taste ZESPRI® payment reflects both the increased level of receipts from the market and also the speed of the sales of the crop. As at the end of July, global sales volumes were up on last year by 3.1 percent, and revenue by over 8 percent. ZESPRI supports the principle of rapid payment to growers for fruit supplied, as determined by receipts and sales rates.

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