Prime Movers sector report: Apples

By ROSE MANNERING

One year into deregulation of the pipfruit industry and the honeymoon is over, Hawkes Bay grower Ru Collin believes.

Last year was the first of operating in a market free of single-desk selling, an unbelievable 96 exporters dabbled in sending apples and pears to international markets, and pipfruit growers experienced their best year in a long time.

Exporters and growers have baulked at the imposition of any sorts of controls, something Collin believes will be needed, especially in tough marketing years.

Last year was an exceptionally good one for tackling the newly deregulated market: the value of the New Zealand dollar was low; fruit quality, size and volume was good; and offshore markets were in good shape. Even so, Collin says some Braeburn apples were not sold well in Europe, at a multimillion-dollar loss to the industry.

There are several worrying signs ahead. This has been a difficult growing season - late frosts and a cold spring have reduced the crop and led to a high percentage of small fruit, especially Royal Gala. New Zealand producers rely on their ability to produce bigger fruit than their competitors (Chile and South Africa) to extract a premium out of the marketplace. Growers here have a higher-cost structure, and higher returns are critical to a profitable industry.

"Our competitors are attacking the market aggressively, it might be just a factor of this season but there seems to be a subtle shift away from New Zealand to cheaper competitors and to easier countries to deal with," Collin says.

He advises exporters not to panic, to hold back if prices are low until they improve, as the crop is not large.

Collin has worked his way through the industry, starting with a stint at Massey University, working in corporate and family-owned orchards, and finishing his apprenticeship with seven years working for Enza, first as a field representative and then managing special orders of differentiated products.

Collin and his wife Chan bought a 6ha property, Rakaunui, in Twyford near Hastings in 1991. He worked his day job with Enza, and the orchard, until 1997 when he decided to put all his eggs in the orcharding basket. The Collins bought a neighbouring orchard, taking their total landholding to 30ha (since increased to 40ha), and six months later they were selected to become the focus orchard for Hawkes Bay, to showcase the adoption of new technology to optimise returns. This three-year stint of hosting scientists, consultants and growers to regular field days proved an intense learning period.

Collin didn't stop there. In 1999 he moved into fruit-growing politics, and started his own fruit-exporting business in partnership with Peter Beaven, known as New Zealand Fresh Fruit Exports. At that time, three-quarters of the orchard business costs were post-harvest.

"I thought if I could at least equal the net return to the orchard, I would consider it worthwhile," he says.

New Zealand Fresh Fruit Exports first operated under a permit in 1999, supplying apples to the American supermarket chain Walmart. Volumes handled by the company have trebled every year, to the present level of 400,000 export cartons. The small fruit-size expected this year has led to a total rethink of their marketing plans (only big fruit is sent to the United States).

"It is disappointing for us, not being able to give consistent supply to our US customers," Collin says.

This inability to consistently fill market requirements augurs badly for the local industry.

Collin was on the Pipfruit Growers New Zealand executive for two years over the period of deregulation (which finally came on October 1, 2001). He supported a single-desk selling system.

"The mechanism was right, we just needed to get the right people doing the job."

But in the end, that task proved impossible, and he felt deregulation was inevitable.

He was also appointed a Fruitgrowers' Federation director in 1999.

Collin believes New Zealand growers are just a little fish in a huge sea.

"There is plenty of opportunity for the country and its growers to do well, but we are more exposed than in the past, and we must make ourselves more relevant to the market."

One step to becoming more relevant to the market will be in the mixture of varieties grown. The Pacific series - Pacific Rose, Pacific Queen and Pacific Beauty - has failed to perform on the world stage. Growers need to keep the quality of their production up, get their costs down, or offer something new. New Zealand has created excitement in the past with new varieties like Royal Gala and Braeburn, but the path to discovering them is expensive and not always successful.

Former monopoly marketer Enza will be disappointed with the volumes it achieved last season, exporting 40 per cent of the national crop, and will be chasing greater volumes. Collin expects to see a considerable reduction in the number of exporters operating this season, with tougher market conditions less conducive to those having a dabble.

He is concerned some exporters have procured fruit without having any market.

"The best return for growers results when fruit is moved in a straight line - at the moment we have anything but that." The good thing about deregulation is that all fruit will find a home. "It allows fruit to leak into corners," he says.

Collin believes there is an urgent need for exporters to work together. He has already gone down that path with exporters he trusts to ensure the right fruit arrives in the right market at the right time. Exporters need to work a lot harder at co-operating with each other, before real gain is felt at the grower level.

"But we are talking about a lot of trust; if one exporter breaks that, then you're in the cart."

He is certain about one thing - this season will sort the good exporters from the bad.

Pipfruit Growers' initiatives to create some level of co-operation in the industry have so far failed. Initially, it promoted a product group for pipfruit under the Horticultural Export Authority, but growers rejected this. Then in January last year, Apple and Pear New Zealand was formed to bring industry representatives together. Exporters failed to support it, and one year later it is all but defunct. There is no mechanism for co-ordinating, and in this area we are clearly behind our competitors. Chile is a highly regulated country, to the extent that every week in a Santiago newspaper, a full schedule of exports by volume, variety, destination and exporter is published.

"In New Zealand we can't even get a national crop estimate," Collin says.

The local industry has some growing up to do, and Collin is hopeful it will not need to grow up the hard way. With some maturity, the New Zealand pipfruit industry can be a prosperous and viable one.

Facts:

Export value: $477 million

Crop size: 19 million 18kg cartons

Key markets: Europe, Britain, US

Number of growers: 1100

Major growing areas: Hawke's Bay, Nelson

Area planted: 14,200ha