Orchard and Lifestyle Report

ORCHARD & LIFESTYLE

EDITION 1 | MARCH 2023

A View From Above The Vines

AUTHOR Clark Mazey - Orchard & Lifestyle Specialist

A snapshot overview of the kiwifruit industry over the past 18 months in the Bay of Plenty.

By Clark Mazey

The kiwifruit industry in the Bay of Plenty, New Zealand, has undoubtedly faced its fair share of challenges over the past 18 months or so. However, despite this, growers in the industry are a resilient type and have learnt to accept that there will always be peaks and troughs in this business, as it is can be dictated by mother nature and factors beyond their control.

In recent times, a major roadblock for those looking to get into Kiwifruit, and for existing growers looking to expand their portfolio, has been changes in bank lending criteria and an upward spike in interest rates off the back of multiple OCR increases from the Reserve Bank. In addition to this, other factors including Covid-19 travel restrictions for RSE workers, frost and cyclone damage, heavy rainfall over summer, and fruit loss issues offshore have also had a significant impact on the industry. This has affected growers directly in the pocket and the greater industry that is linked to the kiwifruit sector.

Wind the clock back 24 months and there was

a hungry appetite for buying and investing in orchards, which drove a genuine fear of missing out amongst potential buyers with demand for quality orchards outstripping supply. This led to record orchard prices, which exceeded $2m per ca/ha for G3 and over $800k for Hayward in some instances. Roll the clock forward, and as anticipated, we have witnessed a normalisation of the orchard property market as values re-balance due largely to the aforementioned challenges, which interestingly has been mirrored in the hesitation of buyers.

Despite these challenges, the global demand for premium NZ grown kiwifruit remains strong,

underpinned by the world-leading Zespri brand and it’s premium position in market. Whilst the past season was challenging and reflected in tray prices, particularly for Hayward, the industry has had a lot of really good seasons in recent years. In uncertain times, one thing is certain: the demand for premium kiwifruit will continue to grow globally if a highquality fruit is delivered to the market.

Right now, there are many opportunities for buyers who adopt that medium to long term view, especially with the G3 license up for grabs shortly, providing opportunities to purchase green orchards and convert over to G3 or Red varieties. Harvest is now underway, meaning that you would be purchasing an orchard with this year’s crop proceeds and resultant cashflow helping ease your way into a new orchard.

In summary, whilst the kiwifruit industry has faced significant challenges over the past year or so, there is no need to be pessimistic about its future. The demand for premium NZ grown kiwifruit will continue to grow globally, and buyers who are willing to buy with a medium to long term view will no doubt benefit in years to come. The industry has faced challenges in the past, but has always bounced back, and this next phase will be no different.

For anyone who is interested in finding out more about this unique time to get involved, or further extend your presence in the kiwifruit sector, please get in contact with me.

While there is only so much that can be controlled in horticulture and farming, those that are prepared to buy with a medium to long term view will likely reap significant rewards in upward cycles, as we have seen committed growers and investors benefit from in the past. For example, during the PSA outbreak in 2010, those smart and long-term investors who understood farming had the foresight and ability to invest in orchards at the time, benefitting greatly from the gains the industry has made ever since. clark.mazey@nzsir.com