Summerfruit
Summerfruit
This commentary discusses the New Zealand summerfruit industry in the two main production regions, Hawke’s Bay and Central Otago. Hawke’s Bay growers mainly supply fresh summerfruit to the domestic market and processing fruit to Heinz Wattie’s Limited (Heinz). Central Otago is much more export-orientated and grows a wider variety of summerfruit, with a larger proportion of cherries and apricots.
Key Points
- High winter chilling and good weather conditions over blossom produced a massive fruit set in both regions.
- Heavy rain in both growing districts throughout the growing season led to a loss of confidence in the product and significantly reduced returns.
- Post-Christmas domestic fruit market returns became uneconomic as the trade became nervous about fruit quality and quantity.
- Although export volumes increased slightly in 2001/02, the export value is expected to be $11.4 million, down 24% compared with 2000/01.
- The United States (US) summerfruit market became very difficult following compulsory reduction in fungicide use.
Physical Factors
Climate
The 2001/02 season will go down in most summerfruit growers’ books as the “season from hell”. Summerfruit, as the name suggests, is best produced in climates of hot, dry weather. Despite reasonable heat, continuous rain in both growing regions turned a promising crop into a disaster.
Rainfall in Hawke’s Bay from September to February totalled 536 mm, up a massive 140% on a normal year of 222 mm (see Table 1). In Central Otago, rain fell on 15 days in December and continued with another 16 wet days in January. As a result, quality suffered and there were major problems with cracking, soft fruit and extensive disease in all summerfruit.
Winter chilling levels, particularly in Hawke’s Bay, were the highest for some time. This resulted in very heavy fruit set in both districts. The early December fruit was of reasonable quality but by early January the effect of the rain was starting to bite. Wholesalers and supermarkets were experiencing significant soft fruit and brown rot losses. These led to poor return sales and a general loss in confidence by the whole trade.
Planted Area
Statistics New Zealand recently produced a report that shows the areas planted in each crop type throughout New Zealand. This regional information is interesting as the last time such a report was commissioned was in 1996. The trends in planted areas over the last decade by crop type and by region are shown in Table 2.
Table 2 shows the New Zealand summerfruit industry has declined in the last decade with total planted area in the year 2000 down 13% to 3,045 ha. The Hawke’s Bay and Otago growing regions, which accounted for 56% of the total area in 1990, now account for 74% of New Zealand’s total summerfruit area. Each of these major regions has about 1,100 ha planted in summerfruit. Although the national planted area of summerfruit has dropped by 13% in the last decade, tree pulls have mainly occurred outside the major regions, in areas such as Auckland, Waikato, Marlborough and Canterbury.
Although both major regions have a similar total planted area, each region grows quite different crops and for different markets. Hawke’s Bay has a large area of Golden Queen peaches primarily grown for Heinz for processing. Most other Hawke’s Bay summerfruit is grown for local market supply. Otago, however, is largely an export-orientated region, able to supply late summerfruit to Australian and Asian markets.
Otago’s two main crop types, apricots and cherries, account for 65% of the total national area. Cherries are the only crop type to show any real increase in planted area in the Otago region, up 267%. All other crops show stable plantings or net declines – nectarines, for example, are down 10% in Hawke’s Bay and peaches are down 19% in Otago. With the very poor season in 2001/02 it is expected that summerfruit trees will continue to be removed in 2002. With the demise of the apricot processing industry in Central Otago, large areas of processing apricots are already being removed. In Hawke’s Bay, a recent revival of pipfruit growing may also see summerfruit blocks being removed.
Production
Early indications were for a summerfruit crop of well above average with a very heavy set of fruit in all types. With little natural drop apparent, the industry mobilised for a huge thinning task. The dry weather was continuing at this stage and some blocks had such heavy crops that they began to show signs of stress. Growers often sent staff ahead of the thinning gangs with sticks to literally knock off quantities of fruit to make the work easier and help the trees bear the load.
Central Otago suffered a labour shortage as orchardists attempted to assemble thinning gangs of twice the normal number. The labour shortage was compounded by the wine industry, which continues to require considerable numbers of casual workers as it expands. This labour shortage lessened as the thinning task was completed and most orchardists managed to obtain all the staff they required for the rest of the season.
As the season unfolded the continuous rain took its toll. Growers lost large volumes of fruit to rot and soft fruit which resulted in only average volumes being marketed.
Export Production
The effect of the wet weather through December and January soon showed up in overseas markets with buyers commenting on soft fruit and the high level of disease. Lines appearing overseas were below the quality expected and the prices quickly began to reflect this. Overall cherry firmness and sugars were the lowest since recording started. Brix levels averaged 16.8 compared with last season’s 18.5.
It is also considered that the rumours of a huge crop encouraged buyers to opt for a lower price strategy to be able to move more quantity and stay ahead of the projected shipments. Most growers graded hard to eliminate rejects and managed to present reasonable lines considering the season. However, New Zealand’s reputation as a quality summerfruit exporter has suffered. The US market produced another complication by cutting back on the use of fungicides allowed on imported fruit which, as this year was ideal for fungus diseases, made control exceptionally difficult.
Of all the summerfruit types, apricots fared the best with a 31% increase in export volume compared with 2000/01. However, even apricots suffered fruit quality problems with later lines having a significant percentage of soft fruit. Fruit size was down – a direct result of the heavy fruit set, a longer thinning season and higher yields. Plums, being more tolerant of wet weather diseases, managed an increase in exports, albeit from a small base.
Nectarines and peaches continue their downward trend in export production. This was due to climatic conditions in 2001/02 and also a continuing loss of the competitive advantage of New Zealand nectarines and peaches. There are now serious reservations about the export future of white-fleshed nectarines and peaches because of continuing resistance in Asian markets.
Local Production
Immediately following fruit set, Hawke’s Bay was setting up for a bumper season. Fruit set was heavy on all varieties. The continuous rain then turned it all around. Large volumes of fruit had to be dumped, and some crops were by-passed altogether. Marketing volumes, however, were normal but returns were slashed due to the poor product quality and the trade’s loss of confidence.
Process Production
Central Otago apricot processing took a heavy blow just before Christmas when it was announced that the Roxdale factory, situated in the Roxburgh valley, would require only 400 tonnes of fruit as opposed to the 1,200 tonnes that were available. This announcement came too late for growers who had already thinned their fruit to the cannery size, which is generally too small for fresh marketing. Growers were left to pick off only the best sized fruit and place them on the already oversupplied local market. The rest of the crop was left to rot.
Growing apricots for processing has been a marginal operation for several years and with the increase in costs this year in extra thinning and fungicide spraying, the true cost of production has risen to close to $1/kg. The factory price remains about 79 c/kg. The current situation is clearly not sustainable.
The Roxdale factory is unable to compete with cheap product from overseas and growers cannot afford to continue to supply at the stated price. A recent fire at the factory caused major interior damage and it may not re-open. Growers of processing apricots have already been cutting down blocks of older varieties which were most suited to processing. This is a considerable loss to the area as the many local people employed contributed a large slice of their wages to the town.
With a lighter crop in 2000/01, Heinz in Hawke’s Bay was looking to process a large tonnage this year. Canned stocks were low and the prospects for a large crop were promising. When the losses started to become apparent in the fresh market, Heinz took the proactive step of encouraging maximum supply by reducing all quotas on Golden Tatura and Golden Queen. Many growers were happy to supply 100% of these crops to processing due to the short shelf life of most of the product. However, the processing crops also suffered volume reductions with premature fruit drop, small fruit size and rot. The Black Doris crop was down 50% on the year before due to rain over bloom. Heinz will be able to take high volumes again in 2003 due to this year’s poor intake.
Financial Factors
Export Returns
Gross returns from all markets were down on the previous year and this was caused by the anticipation of large fruit volumes, smaller overall sizes and the lack of top quality product. Although the export volume was up slightly this year (see Table 3), the export value is expected to be down. In the previous two seasons the FOB value of New Zealand’s export summerfruit crop has been $14.7 million (1999/2000) and $15 million (2000/01) which equates to $4.48/kg and $6.45/kg respectively. It is Summerfruit NZ Incorporated’s opinion that the FOB value in 2001/02 will be closer to $5/kg leading to a much reduced FOB value of $11.4 million.
Local Market Returns
With local volumes well up on the previous year and generally poor fruit quality, local returns dropped back to close to the disastrous 1999/2000 result (see Table 4). Domestic returns have been very volatile in recent years as volumes and quality have varied. In 2000/01, volumes were down 40% and quality was good resulting in very good returns. This year’s returns are well below the level required to generate a sustainable profit (see Table 5).
Processing Returns
Heinz, the largest summerfruit processor based in Hawke’s Bay, offered growers prices unchanged from the previous season. The average payout for Golden Queen peaches was $500/tonne, Black Doris plums $1,000/tonne, other plums $800/tonne, and nectarines $640/tonne.
Expenditure
Orchard costs increased due to higher thinning, spraying, harvesting and packing costs due to the poor recovery of marketable fruit. The overall average size of summerfruit was down in Central Otago compared with the previous season. Smaller fruit always cost more to harvest and also fall short of the premiums paid for the larger sizes in the marketplace. The wet weather through December and January also added to growers’ spray costs as several extra fungicide sprays were applied.
Net Result
Overall, 2001/02 has been an extremely disappointing year. Gross margins achieved this year were on average 60% down on 2000/01 (see Table 5) and were generally below economic sustainability. Growers still have to meet debt servicing, drawings and depreciation out of the calculated gross margin and, in 2001/02, the levels achieved for most summerfruit types are not enough. Unfortunately the legacy of the poor quality fruit will carry over to the 2002/03 season and growers are aware that they will not be marketing from a position of strength.
Issues and Trends
Summerfruit NZ Incorporated has broadened its horizons and is putting effort into the New Zealand domestic market. There will be a strategic planning session this winter that will consider the needs of the total industry and not just the export business. A domestic market team has been set up to look at standardising grade standards, fruit sizing and labelling. With the continuing demise of export markets for peaches and nectarines, Summerfruit NZ Incorporated will be working to assist sales through involvement in the “5+ A Day” programme.
The New Zealand Vegetable & Potato Growers Federation (Inc) Quality Assurance Scheme has been heavily promoted by the retail trade in recent seasons. Many supermarkets have made the scheme mandatory for growers who intend to supply their chain. Growers have severe reservations about the integrity of the scheme with many observing inequalities. When the pressure of the season comes on, the certification requirements seem to be down played with supermarkets sourcing from anyone. Growers are also concerned that they are the only components of the chain to be audited whereas all, including the supermarkets themselves, need to be audited to offer full integrity.
The export cherry crop is projected to increase significantly over the next few years and growers are concerned that new markets need to be expanded to cater for the increasing volume.
In recent times many new summerfruit varieties have been introduced to New Zealand under a production based royalty (PBR) scheme. Commonly the plant breeder takes 3% of fruit sale value rather than charging a tree-based royalty. The hope is that the variety is unique enough in the market to capture a premium. To date the varieties under a PBR scheme have not achieved premiums possibly due to the small size of the New Zealand domestic market. Growers have become increasingly aware that the royalty under a PBR scheme is significantly higher than the tree-based scheme and will seriously question planting any further PBR varieties.
The use of bird netting is becoming very popular on small to medium sized blocks of cherries with several growers now convinced that they could not survive without it. Very large blocks continue bird control with noise and firearms, and claim to limit damage to 5%, a level that would make the use of netting uneconomic.
Central Otago continues to have difficulty attracting sufficient labour to thin and harvest the crop. With an estimated 50% of the labour being overseas travellers, providing accommodation is becoming essential to guarantee sufficient numbers of people to thin and harvest the crop. Growers who provide accommodation generally have little trouble in keeping staff.
There is also a lack of properly qualified staff for full-time positions on orchards. Diploma in Horticulture students are snapped up immediately but there are not enough coming through the system. The industry needs to promote itself as a career choice.
Concerns are still being expressed about border control effectiveness. While growers are very supportive of the recent improvements, they believe that the Government should not become complacent. The summerfruit industry is particularly concerned about the risk of entry of the plum pox virus and fruit fly. Central Otago growers are particularly concerned with the controls in place at the Queenstown airport.
Summerfruit growers are now moving to the SummerGreenTM spray programme which involves justifying pesticide applications by monitoring pest and disease risk. This has resulted in significant reductions in insecticide use, particularly the potentially dangerous organophosphates. Export growers using SummerGreenTM have advised that they have had some quarantine clearance problems caused by passengers or beneficial insects. They feel that attempting spray reduction is pointless if beneficial insects are to become “quarantine pests”.
Contact for Enquiries
Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
Contact this person
