Zespri plans for further production in Europe to boost supply

Zespri, New Zealand's statutory kiwifruit exporter, is optimistic about the 2018 season after some growers saw weakness in 2017, with plans to continue global expansion.

In the 2017 season, the Te Puke-based company achieved distributable profit for its grower shareholders of $34.8 million in the year to March 31 on a 19% increase in turnover of $2.26 billion. Payments to New Zealand growers per tray supplied fell 1% to $9.46, although total payments were up 21% at $1.39 billion because of a steep increase in total supply.

Domestic and international production of gold kiwifruit rose 48% to 53.2 million trays, 47.9 million of which were grown in New Zealand. Returns per tray of New Zealand-grown gold fruit rose 39 percent to $98,838 per hectare, whereas the value of a hectare of the green variety fell 6 percent to $53,555. Organic green fruit returns rose 3 percent to $54,427 per hectare.

At the company's annual meeting in Mount Maunganui today, chairman Peter McBride said he recognised the 2017 season had been difficult, with some growers facing lower average yields for green and organic green varieties.

"However, market conditions are positive and our August forecast reflects a good demand position," Mr McBride said. "It is supported by strong investment to build product and brand awareness, earn shelf space and support sales through retail channels.

"The August forecast shows average OGR (orchard gate return) returns per hectare for green and green organic that reflect lower yields and higher per tray returns. Gold continues to perform strongly across all markets, reflected in good returns. Green 14 returns are off this year, impacted by a very narrow market mix for this small category. I note these are averages and recognise that the result may be difficult for orchardists with lower yields."

Mr McBride said the company was focused on improving returns on green kiwifruit crops, growth from its SunGold variety, developing its organic category and commercialising new varieties.

"I am confident that successful implementation of this strategy supported by 12-month supply will see continued growth in grower and shareholder returns," he said.

Zespri has now licensed 3720 hectares for SunGold production in Europe, which it expects to produce around 40 million trays a year once fully mature.

Outgoing chief executive Lain Jager said it was essential for Zespri to have year-round supply to compete on the global stage.

"Twelve-month supply is critical to our ability to optimise SunGold growth and Zespri's brand strength globally," Jager said. "If we do not supply, our competitors will, and our offshore production of SunGold is significantly lagging demand. The challenge should rightly be about whether we should go faster with offshore supply rather than slower."

Mr Jager announced he was leaving the company last September, having been in the role since 2008. Today, McBride said the company is near to finalising the appointment of a new CEO and an announcement will be made "in the near future."

(BusinessDesk)