Continuing slump means applegrowers may quit industry

Many apple growers could quit the industry according to a Government report that says earnings of an average Hawke's Bay pipfruit grower slumped almost $150,000 last year and 2005 is shaping up to be another bad year.

Initially due for release in May, the annual Ministry of Agriculture and Forestry's pipfruit monitoring report was held back because of concerns the dim findings could further dent the rock-bottom prices New Zealand apples are fetching overseas.

It indicated small to medium sized owner-operators were "very nervous" about the future, "with many looking to exit over the next 12 months" because the risks were felt to be too high.

The report predicts the downturn in the $300 million industry could have a wider impact on the regional economy in Hawke's Bay, which produces half the nation's export apples.

An extraordinary combination of factors including the high New Zealand dollar, uncoordinated marketing, strong competition from southern hemisphere competitors and a large carry-over of northern hemisphere fruit have combined to see prices drop from highs of more than $21 dollars per carton two years ago to a forecast $15.39 this year -- well below the cost of production.

Hawke's Bay Fruitgrower's Association president, Leon Stallard, said growing apples was now a "marginal business" and struggling orchardists would have to look carefully at their financial position to judge whether they could make it through.

"They're not going bust yet. The banks have been very supportive because it's a volatile industry but it is happening. There are a lot of blocks being put up for lease and others not willing to lease any more...It's sell and get out," said Mr Stallard.

But with the industry in a slump, there is little interest in taking on pipfruit leases, and many growers are instead looking to rip out orchards to make way for more profitable crops.

One of New Zealand's biggest squash growers, Hastings-based JM Bostock, was fielding a large number of calls from worried pipfruit growers and expecting to plant an additional 100ha this year to capitalise on available land.

"There have been lots of enquiries about how much we would pay and how many years we would lease, but most are waiting to see how the season turns out," said squash manager Kevin Richardson.

The monitoring report, based on interviews with agribusiness leaders and 20 orchardists in both Hawke's Bay and Nelson, aims to accurately reflect the typical grower position in each region.

On the back of 2004 -- described at the time as a "season from hell" -- surveyed growers expected "significant losses" this year as well.

With pipfruit underpinning the Hawke's Bay economy, key changes including developing new varieties, improved marketing and better quality fruit were seen as crucial for the industry to move forward.

- HAWKE'S BAY TODAY