Bay of Plenty Business News November/December 2017

BAY OF PLENTY BUSINESS NEWS November/December 2017 5
SunGold surge will
bring post-harvest
pressures
Some post-harvest processors are wary about the implications
a proposed big boost in SunGold kiwifruit plantings is likely to
have for industry infrastructure in coming years.
By RICHARD RENNIE
In late October Zespri
announced it would be
increasing the area available
for SunGold kiwifruit licences
from the anticipated 400ha
annually to 700ha a year. Four
new tranches will be offered
over the next four years.
This comes on top of the
800ha of SunGold licences
issued over the past two years,
and will take the total new area
of 3500ha by 2022.
The pressure SunGold places
on post-harvest resources is
particularly problematic due to
its compressed harvest period,
often down to only two to
three weeks compared with the
longer shoulder Green offers.
Michael Franks, chief executive
of Seeka, one of New
Zealand’s biggest processors
and growers, said he was conscious
that as long as volume
increased in a compressed harvest
time frame it would create
bottlenecks at post-harvest
points. And in the absence of
any compelling supply chain
innovation, this would require
more post-harvest investment.
“In reality we are going
to want to have some of the
fruit stored offshore. This is
not a new suggestion and we
have done this with a facility
in China.”
As volumes have risen,
Seeka has had to spend about
$15 million in storage facility
investment for short-term
housing of fruit. New Zealand
storage is estimated to cost
about $12 a tray to construct.
Franks sees this as an
inefficient use of shareholder
equity, with growers having to
pay to use the facilities. He’s
long been on the record voicing
frustration at what he has
viewed as industry inertia in
implementing offshore storage
and handling facilities. The
limited collaborative marketing
opportunities have meant
there has been little opportunity
to achieve this, he says.
David Courtney, Zespri’s
general manager of grower
and external relations, said the
organisation was acutely aware
that meeting market demand
was only part of the puzzle in
ensuring smooth delivery.
He confirmed off shore
processing and storage were
among the post-harvest options
the industry would need to
consider collectively.
“We are talking to growers
and packhouse operators on
meeting that opportunity in the
market, and how we can get
there together.”
Zespri is planning a roadshow
soon to lay out its
10-year plan for what the supply
side for fruit looks like.
Current SunGold production
is about 50 million trays.
Given maturity times and
increased areas being planted,
estimates are that once all the
3500ha of additional licence
area is at full production
sometime beyond 2022, total
SunGold production could
effectively double to 100 million-plus
trays.
Apata managing director
Stuart Weston said the post-harvest
industry had been taken
aback by the latest increase in
Gold licence and was still reeling
from the news and how it
would work in practice.
“Anything can be worked
through if we have the will to
collaborate on this,” he said.
“But it’s a massive increase
THE MIDAS TOUCH
• The SunGold conversion after the Psa outbreak and its
subsequent appeal in the market has resulted in the fruit
having a Midas touch upon orchard values.
• Early licences were issued for about $7000 per ha, and
the first tranche of 400ha averaged $171,000 per ha, while
last year’s 400ha issue saw values rise to $235,000 per ha.
• Bay of Plenty SunGold kiwifruit orchards are now
fetching $1 million per canopy ha, with some selling less
than a week after being listed.
from the original plan if
the industry is to maintain
Hayward numbers as Zespri
wants. It’s almost tantamount
to another Te Puke equivalent
in new plantings.”
Weston said there had
already been a slow realisation
that the post-harvest sector
was going to struggle to
cope with the initial SunGold
release plan.
“Zespri checked in with us
and asked how we saw it, and
our answer was, it’s going to
be a major challenge for capital
and labour. We need to front
fund the development of processing
capacity - that’s what
we were wrestling with. Then
they came out and increased
the hectarage again.”
The increased Gold could
exacerbate the problem of
more and more post-harvest
assets being utilised for a shorter
time, said Weston. However,
the increased SunGold licence
could also see an easing in the
hunger of Green growers to
convert to Gold, he added.
Zespri’s Courtney said the
packhouses were conscious of
the volumes coming and would
make decisions on how best
to handle and negotiate the
investment required to cope,
possibly bringing in outside
investment.
“We are aware of the pressures
that are likely to come
on. This season we are looking
at about 140 million trays
[Green and Gold combined],
which we can handle, but it
is year two and beyond where
things will get tighter.”
Courtney said this round
of licence offers, which closes
in April next year, was from
a single pool, rather than separating
grafted orchards from
green-fields development.
Over the past two years, of
the 800ha planted in SunGold,
500ha was cut over and grafted
onto Green orchards and
the remainder was green field
orchard developments.
Courtney confirmed Zespri
was conscious it did not want
to lose too much more Green
crop and that it was getting
close to that point now.
“We still need to have a
portfolio of Green fruit to offer
our markets, it is still a very
strong market.”
- Additional reporting by
DAVID PORTER
0800 443 338
116 Hewletts Road, Mt Maunganui
www.FarmerAutovillage.com