Many kiwifruit growers are “suffering financially” and some say they are struggling to cover rising costs, with one describing the situation as tough.
But most orchardists remain “generally positive” and a record crop of more than 197 million trays was produced this season.
NZME reported this month that kiwifruit orchard values fell by hundreds of thousands of dollars and kiwifruit SunGold licence prices were down nearly 40% on last year – while producing orchards increased by more than 1100ha in the past three years.
Indicative per-tray returns have dipped from last season’s record highs that bounced off the back of two bad seasons plagued by adverse weather events and poor fruit quality. Some growers were forced to visit their banks to stay afloat during those periods.
Pāpāmoa kiwifruit grower Rob Thode said that 10 years ago he was paying $16.50 an hour for labour. Today, he was paying $34 to $35 an hour alongside other costs including fertiliser, machinery and diesel.
Thode said a decade ago he got $8 a tray for his Hayward (green) kiwifruit and this year’s estimated forecast from Zespri was about the same.
“So the reality is... cashflow is hugely constrained. Some growers are struggling to cover their variable expenses, they are certainly not covering their fixed expenses and not getting a return on investment which are the three things you need to do.”
Thode said growers were often paid in increments over a long period. For example, his Zespri Ruby Red crop was sold in May and payments for that would “dribble out” over 14 months, he said.
A Tauranga grower who leases out two green kiwifruit orchards told the Bay of Plenty Times he had just received his final payment for kiwifruit harvested in 2023.
The grower, who spoke on condition of anonymity, said it took a long time to get the money.
“I’d like to see that speed up a bit.”
Last season, the return per tray was “awesome”, he said, but “not many people had good crops”.
He said the season before was a “disaster” and one orchard made a loss.
“We don’t have a big mortgage... so we are one of the lucky ones.”
Don Heslop, another grower, agreed payments were “drip fed” but said that was the nature of the industry – a system he agreed with and likened to how the dairy sector operates.
He said kiwifruit growers used to be paid directly, but now Zespri paid post-harvest/packhouse companies, which paid growers. .
On-orchard costs per hectare for gold kiwifruit could range from $50,000 to $110,000, Heslop said, and that did not include packhouse costs which were about $3.20 to pack and about 90 cents to cool store per tray.
“So you know if you are doing 10,000 trays a hectare, say if your packing and cool was $4.20 a tray, that is $42,000... that is a heck of a lot.”
Kiwifruit growers who had moved on to higher interest rates would be feeling the pinch, Heslop said.
“It’s gonna hurt. There are definitely green and gold growers that are suffering for one reason or another, and it’s really hard. You have to delve into each case individually to find out why that is.”
But Heslop believed the industry was in a “really good shape”.
“Zespri is very commercially focused and very well run... and one of the best marketers in the world and I see a positive future.”
Kiwifruit grower Mike Smith said the rising costs were noticeable, especially labour.
“When you get your picking and pruning bill you really feel it.”
He said some growers would be struggling because they had a bad season and some would be feeling good because they had a good season.
“I don’t think you could describe it as a crisis but it is certainly tough for some. This year, with better crops and reasonable forecasts, it should be okay.”
Like many other businesses, the kiwifruit industry was experiencing increased operating costs which would impact profitability, New Zealand Kiwifruit Growers Inc (NZKGI) chairman Mark Mayston said.
“Many growers have been suffering financially and will be eagerly hoping for strong returns after two seasons of poor yields and increasing costs. While initial forecasts from this year’s bumper crop look promising, it will be some time until growers have a strong idea of the returns they will achieve.”
Labour on orchards and in packhouses was one of the largest costs, Mayston said.
“Increasing costs have been an issue for growers for quite some time and are important to reduce not only to retain profitability but to continue to remain competitive, within the global fruit bowl. Innovation is one key area being concentrated on to alleviate costs,” Mayston said.
“While post-harvest suppliers have good infrastructure which allows them to adopt technological innovation to support the cost-effectiveness and efficiency of their packing, storage, and quality control capability, innovations are less easy to implement on orchards.
“Nevertheless, NZKGI advocates on behalf of growers to industry stakeholders to implement innovations on orchards which will reduce growers costs.”
Mayston said grower returns had generally kept up with increasing costs in the past but this was changing. Growers’ costs had risen faster in recent years but lower yields and quality claims had led to more growers breaking even or making a loss.
“Growers who are usually less profitable because they produce a smaller yield of a variety that is sold at a lower price in markets have been left particularly exposed to their costs and will be under pressure financially.”
Like any investment, there were risks to consider, Mayston said, and investors should take a long-term perspective,
A record crop of more than 197 million trays of kiwifruit, with about 30 pieces of kiwifruit a tray, was produced this season, and most of the crop was heading to overseas markets.
“The quality of the fruit is holding up well so far. While there is always room for improvement, overall most growers will be generally positive about the last season.”
A Zespri spokesman said the industry had faced a couple of challenging seasons, including difficult growing conditions, adverse weather events, lower yields, fruit quality challenges, and rising costs, placing many growers under financial pressure.
The spokesman said it was “pleasing” to see the industry’s “collective efforts” to lift fruit quality after a difficult 2023/24 season. This, combined with strong consumer demand and good pricing, led to record per-tray returns for all categories other than Organic SunGold. Green’s return was up significantly from $5.78 in 2022/23 to $9.55 per tray, the spokesman said.
“Our focus continues to be on maximising the value we can return to growers this season, including at a per-hectare level, with this season’s improved on-orchard yields good news for many growers, and our latest forecast reflects the positive start we’ve made to the current 2024/25 season.”
Its data shows in 2013/14 the average orchard gate return for green kiwifruit was $5.23 a tray compared with $9.55 in 2023/24.
It had operated a pool system since the early 1990s.
“Zespri pays growers actual market returns, rather than an upfront price for the fruit. Payments are made throughout the season as the crop is sold and cash received, ensuring growers receive regular cashflow. Only a very small proportion of payments occur after the end of the financial year in March (the year following a harvest), as the season’s returns are reconciled as part of our final year-end accounts being prepared.”
He said Zespri remained focused on operating efficiently, managing costs and delivering value to the industry.
“Zespri charges a margin to the grower pools which is governed by an enduring funding agreement, set up to return as much value back to growers as possible and provide funding to cover Zespri overheads. The enduring funding agreement targets Zespri New Zealand Supply ebit [earnings before interest and taxes] of 1% over sales.”
Correction: A sentence outlining how much of this season’s crop is heading overseas has been updated.
A disregard for authority could be why those attending court are thumbing their noses.