Financial Factors
Revenue
Asparagus
Process and local market prices for Hawke's Bay and Manawatu in 2002 averaged $1.80-$2.00/kg. Export prices averaged $2.35/kg ranging from $1.00-$9.00/kg during the season. These prices were lower than last season because of increased competition in the marketplace, primarily from California and Australia, the strong Japanese yen and the major increases in air freight costs. Flights into the Asian market have been significantly reduced because of world events such as SARS, and there is increased competition for space with higher priced commodities, such as cut flowers and strawberries.
Low returns from the Japanese market meant exporters increased volumes into North America and South East Asia. Volumes into the United States and Canada almost doubled this season.
It is expected that there will be a rise of about 15% in the process price in the coming season and there is concern that more blocks will be removed because of lack of profitability unless the price increase occurs.
Fresh export returns have reduced this season because of the higher value of the New Zealand dollar (NZD).
While prices are averaging $2/kg, the only blocks which can be farmed profitably are those returning 4-5 t/ha. This is likely to mean that some of the lower yielding blocks will go out of production. There is downward pressure on the process price as the NZD appreciates. If this continues, asparagus production is likely to also reduce as it becomes uneconomical to grow the crop.
Carrots
Prices paid for carrots were similar to previous years. Process carrots, washed and crowned, are fetching $140/tonne in the yard.
Sweetcorn
In Gisborne the average price paid for super sweet varieties was $180/tonne. With excellent yields this season, sweetcorn was a very profitable crop.
In Hawke's Bay prices increased by around 5% to an average of $135/tonne.
Peas
Pea prices increased by about 5% this season which, together with increased yields, resulted in a good season for growers.
Potatoes
Prices for potatoes averaged $180-$200/tonne and peaked at $245 later in the season. Local market bags sales have improved with prices averaging around $3.10/kg compared with $2.00/kg last season. Growers continue to make very little money at current prices and producers report that people are changing to crops such as onions or balage in search of better returns.
Squash
In Gisborne the prices for export squash to Japan varied a great deal. An average price over the season was around 45 c/kg, a drop of 15-20 c/kg compared with last season.
The market in Japan started strongly but declined rapidly with consumption dropping, partially related to problems with product from Chile. Returns were down again this year. As a result of this a number of Hawke's Bay growers are considering growing onions instead of squash in the coming season. Other growers are looking at ways of changing management techniques to reduce costs and make the crop more profitable. Hawke's Bay prices ranged from $0.30-$1.00/kg.
Many squash growers have lost money on their squash this year as a result of a very difficult season.
Tomatoes
Tomato prices were stable at around $100/tonne and are expected to be unchanged next year.
Onions
Onion prices in Hawke's Bay averaged around $7.00-$7.50/20 kg bag for domestic and B grade and $7.50-$8.50/20 kg bag for 1st grade.
Expenditure
Producers are facing increasing costs because of compliance issues related to "safe food", being an "approved supplier" and meeting increasingly stringent health and safety requirements.
The cost of lease land in the Manawatu area has increased as a result of competition from dairy and sheep farmers.
Labour costs are also increasing because of shortages of skilled people and competition from the fruit industry which needs workers at the same time as the asparagus is harvested. This has increased labour costs in some cases by up to 20%.
The increasing cost of air freight had a negative effect on fresh market export to Japan. New Zealand exporters are experiencing difficulty competing with countries like Australia, which are able to get their product to the market more cheaply.
Producers report that there have been a range of other increases in costs of production including the cost of agrichemicals and fertilisers (by about 10-15%), transport costs, fuel prices, and seed costs for a variety of reasons (including compliance and testing issues).
Net Result
Table 4 shows the gross margins for the 2002 year as being similar for peas both in Gisborne and Rangitikei, and shows a very significant increase for sweetcorn in Gisborne.
Table 4: Summary of Estimates of Gross Margins 2002
Crop |
Costs |
Yield |
Price |
Income |
Gross Margin |
Peas: |
|||||
Gisborne |
1,215 |
5.5 |
310 |
1,750 |
490 |
Hawke's Bay |
1,604 |
5 |
315 |
1,575 |
-29 |
Rangitikei |
1,224 |
6 |
300 |
1,800 |
576 |
Sweetcorn: |
|||||
Gisborne |
1,403 |
17.5 |
180 |
3,150 |
1,747 |
Rangitikei |
1,411 |
17 |
125 |
2,125 |
714 |
Squash - Gisborne |
4,552 |
13 |
450 |
5,850 |
1,298 |
Asparagus - Hawke's Bay |
4,274 |
3.6 |
1,750 |
6,300 |
2,026 |
Sources: Agriculture New Zealand Ltd, New Zealand Vegetable & Potato Growers Federation (Inc) estimated cost of production and revenue
The methodology and Federation's disclaimer must be referred to before using the above costings.
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
