Process and Fresh Vegetables
This commentary covers the production, profitability and trends and issues for process and fresh vegetable growers throughout New Zealand, selling their produce either locally or on the export market. The report is an amalgamation of the previous South Auckland/Waikato Commercial Vegetable, Lower North Island Process and Fresh Vegetable, and Canterbury Process and Fresh Vegetable reports.
The commentary covers the growing season from July 2003 to June 2004.
Key Points
- The 2003/04 growing season was, on average, cooler and drier in most parts of the country. Extreme events such as the lower North Island floods and a brief heat wave in Canterbury impacted significantly on production.
- The industry continues to rationalise towards fewer but larger growers. For example, 73 growers exited the tomato industry last season, but remaining growers are increasing their investment.
- Prices for most export crops decreased markedly in 2003/04 due to the relative value of the New Zealand dollar (NZD). The Japanese market for squash and asparagus and the European market for onions were particularly difficult for exporters.
- Low unemployment levels resulted in growers struggling to find staff, particularly for planting, weeding and harvesting crops.
- Good quality cropping land is becoming more difficult to obtain at prices that provide a profit from growing particular crops.
Physical Factors
Climate
In Pukekohe, the 2003/04 season was drier and cooler than usual. Annual rainfall (May-April) was 78% of normal and temperatures were, on average, 0.7oC cooler. Until the heavy rain in February, the season was viewed by growers as being very good. Temperatures in spring were cooler which slowed growth in most crops. Rainfall in February was 320% higher than normal, at 210 mm. This high rainfall, along with the associated low light levels, impacted on the growth of crops and the ability to work the ground and harvest crops. This heavy rainfall was followed by 2 months of very dry conditions when only 25% of normal rainfall occured.
In Gisborne, the growing season was generally favourable. The district received more rain than average (131%) and temperatures were only slightly below average. Warm summer temperatures, timely and higher than normal rainfall, and settled harvesting conditions led to satisfactory or above average yields in tomato and sweetcorn crops. Squash growers had a very difficult season, due to the fungal disease powdery mildew, which was prolific. Weather conditions early in the season were ideal for powdery mildew development, and most growers were unable to control its spread. Affected plants experienced low crop set and crop covers were lost causing sunburn problems.
In Hawke's Bay temperatures were considerably cooler than normal for the entire season, whereas rainfall levels were average. Temperatures, particularly in the key growing months of spring and summer, were 1oC cooler on average. Many crops suffered from lack of heat units. Rainfall was above average for the early part of the season, particularly in August and September, when over twice the usual amount fell. Flooding in mid February affected crops, especially in Central Hawke's Bay, and totally devastated many crops and cropping land in Manawatu/Horowhenua. High winds also caused crop damage in January and February. March and April in Hawke's Bay were dry and sunny, with half the average rainfall. For many crops this provided ideal harvest conditions, and improved yields and quality beyond earlier season negative predictions.
With the exception of a wet September in Canterbury, when double the monthly long term mean fell, the season was moderately to very dry. Monthly rainfall at Lincoln ranged from 50-70% of normal, except in December when only 1.2 mm fell (5% of normal). Annual rainfall (May-April) was 461 mm, or 71% of the long term average of 648 mm. Air temperatures were warm in June (+2oC), but remained cool until January when they were 2.3oC (14%) warmer than the long term average. From February to April, temperatures again remained cooler than the long-term average.
For the first 3 weeks of the New Year, the daily maximum temperatures in Canterbury remained above 26oC, with a number of days above 35oC. Potential evapotranspiration (ET) levels were calculated at up to 15 mm/day, and total ET was estimated at 117 mm for the first 2 weeks of the year.
These extreme weather events in Canterbury had a significant impact on many crops, as heat, drought, or high ET affected growth or quality. Typically, crops shut down for a number of weeks, so that yields were reduced, with diverse crops such as peas, sweetcorn, cabbages and spinach being affected. Farmers generally did not have sufficient water or capacity to irrigate all paddocks in January, and growers concentrated on high value crops only, allowing lower value crops to suffer. Even with the wetter conditions in February, a number of growers still did not fully irrigate, possibly not realising how dry the subsoil was after the drought.
Table 1: Total Monthly Rainfall
| 2003/04 | Apr |
May |
Jun | Jul | Aug | Sep | Oct | Nov | Dec | Jan | Feb | Mar | Apr |
| Pukekohe | 26.6 |
78.8 |
122.1 |
70 |
56.8 |
151 |
89.8 |
79.2 |
84.4 |
81 |
210.2 |
11.6 |
29.6 |
| Hawke's Bay | 51.6 |
99.8 |
35.2 |
33.4 |
153.4 |
132.7 |
26.8 |
56 |
76 |
58.4 |
90.2 |
19.6 |
45.4 |
| Canterbury | 64.6 |
23.0 |
23.2 |
53.2 |
48.4 |
88.2 |
27.2 |
35.6 |
1.2 |
21.2 |
43.4 |
36.8 |
60.4 |
Total rainfall in millimetres
Table 2: Monthly Temperatures
| 2003/04 | Apr |
May |
Jun | Jul | Aug | Sep | Oct | Nov | Dec | Jan | Feb | Mar | Apr |
| Pukekohe | 15.9 |
14.1 |
12.8 |
10 |
11.3 |
13 |
12.9 |
14 |
17.5 |
18.7 |
17.6 |
15.3 |
13.8 |
| Hawke's Bay | 15.2 |
12.3 |
10.8 |
6.6 |
8.3 |
11.2 |
12 |
13.8 |
16.5 |
17.5 |
17.3 |
14.1 |
11.8 |
| Canterbury | 10.5 |
10.2 |
8.9 |
5.6 |
7.2 |
9.6 |
10.8 |
13 |
16.1 |
18.3 |
15.7 |
14.4 |
11.1 |
Temperatures in degrees Celsius
Production
Potatoes
An estimated 11,525 ha of potatoes were planted in New Zealand in the year ended December 2003. This is 9% higher than the 10,611 ha recorded for the previous year. The demand for potatoes in New Zealand is static, and any growth will need to be driven by the export side of the industry.
Prior to February, growing conditions in the upper North Island were described by growers as very good. Heavy rain in February, followed by dry conditions in March and April, made it difficult to cultivate the soil, delaying ground preparation and potato planting. Conditions eased in May due to rain. Some growers resorted to using an irrigation pass prior to ground preparation. Growers coped, but time was extremely tight between ridging and planting, which does not allow much room for further delays once winter rains arrive.
There is concern that flood-affected potatoes will have poor quality and are unlikely to store well. As a consequence, growers in the Manawatu are harvesting their crop early rather than the normal practice of leaving them in the ground and slowly releasing them onto the market throughout the year.
The Vegetable and Potato Growers Federation (VegFed) estimates that the February flooding caused losses of about 20,000 tonnes of process potatoes, or 25% of the fresh potato crop in the Manawatu, Horowhenua and Rangitikei districts. Based on a survey of growers, it was estimated that 515 ha of potatoes were lost to the floods.
In Hawke's Bay potato growers have had a good season, with above average yields.
Average potatoes yields in Canterbury were experienced due to hot, dry conditions in January, but quality was high with less disease pressure. Potato seed producers commented that they experienced a better season than expected, and that quality was high, although the bypass (potatoes that are too big for seed) of table potatoes will be down due to smaller tubers.
Pukekohe potato growers produced an average of 50 tonnes/ha in 2003/04, while Canterbury production was slightly below this, at 42 tonnes/ha.
There was an issue during 2002/03 with some poor quality potato seed lines, particularly process lines. Poor seed can affect both yield and cooking quality of the next year's crop, as well as having potential long term impacts through disease contamination of the soil. Problems have included low germination, skin diseases and viruses, some of which may have been present in previous years. However, it became obvious during 2003, due to the visual appearance of the potatoes, which initiated further, more detailed, inspections. Seed growers implemented a set of protocols in 2003/04 to try and overcome these problems.
Onions
An estimated 5,496 ha of onions were planted in New Zealand to the year ended December 2003. This is very similar to the 5,488 ha grown in the previous year.
In the Pukekohe/Waikato area, onion planting went reasonably well. Growing conditions up to February were generally very good, producing a strong crop with yields averaging 50 tonnes/ha. When the heavy rain arrived in February, initial expectations were that the crop would suffer from a reduction in quality caused by water staining and fungal diseases that may affect the crop in storage. These concerns did not materialise. The reason for this is thought to be a combination of very good plant health prior to the dry conditions in March.
In Hawke's Bay the weather provided a good strong growing season for onions, although it lacked the peaks in temperature to finish the crop. Early harvest went very well, although 90 mm of rain in February in four events made harvest conditions extremely difficult and decreased crop quality by up to 20%. This was mainly because of water staining and skin quality issues. Hawke's Bay early season onion yields were very good, but in the late season, yields were reduced. Rain in July and August delayed later planting until late August-September, and reduced yields by up to 15%.
Approximately 200 ha, representing 10,000 tonnes, of onions were lost to floods in the lower North Island.
The area in onions was up in Canterbury as growers anticipated a strong selling season due to low stockpiles of onions in key markets. Onion quality in the region was good due to dry growing conditions. On average, Canterbury growers harvested 35 tonnes/ha
Squash
A total of 7,493 ha of squash was planted in New Zealand this year. This is slightly down (4%) on the previous season's growing area. The production area decreased due to a reduction in grower numbers, with around 50 growers (25%) exiting the industry. The majority of squash (73%) is grown in the Hawke's Bay/Gisborne region.
Late crops of squash in Hawke's Bay and Gisborne were affected by powdery mildew. Hawke's Bay growers managed to control it at significant expense. Gisborne growers lost crops as leaves died, exposing fruit to sunburn and making them worthless for export. Factors contributing to these losses include ideal weather conditions for the disease; poor timing of sprays and poor application techniques; previous overuse of chemicals leading to possible disease resistance problems; and infected crops acting as a continued source of infection after being abandoned in mid season when prices crashed.
In the Hawke's Bay, the wet spring resulted in a huge crop of squash which in turn dragged prices down in Japan, the main export market. Demand in Japan was also lower because of a depressed economy.
February's floods wiped out crops in Manawatu, Horowhenua and also in Central Hawke's Bay. Approximately 1,400 ha of squash, valued at $1.35 million at the farm gate, were lost in these districts.
A total of 76,860 tonnes of squash was shipped in 2003/04. This is down 18% on the volumes shipped in the previous year. Given that this export volume was produced from a similar area, the lower volumes of fruit exported provide an indication of the amount lost to disease and flood, or simply not marketed due to poor export prices. Most reject squash is used to produce squash powder. Cedenco in Gisborne processed some 3,000 tonnes this season.
Greens
Production of greens in the Pukekohe region was average during 2003/04. Temperatures in February, March and April were on average 2oC cooler than normal. February in particular had lower light levels and this, combined with fluctuating temperatures, resulted in difficult growing conditions with a large amount of the lettuce crop going to seed.
The wet February disrupted the planting programme, which had a flow-on effect later in the season. Lettuce was in short supply in February, March and April as a result of flooding in the lower North Island, and difficult growing conditions in Franklin during February.
The lettuce aphid (Nasonovia ribisnigri) was not as destructive this year as it has been previously in Franklin. Growers have generally learned how to control this pest. The peak in the aphid flight was in April. There was a good correlation between the trap results displayed on the Internet site www.aphidwatch.com and what was being observed on the ground by growers. This year, the highest incidence of the lettuce aphid occurred in the Hawke's Bay.
A wet winter and early spring made conditions difficult for growers of leafy greens in the Gisborne region.
Fresh vegetable production in Canterbury has remained static, with little change in the number of growers. Specialisation has occurred, with growers producing larger areas of fewer crops.
Asparagus
The season has been described by one asparagus grower as a "mixed bag". It started slowly with a cold spring. Cool weather continued and the expected flush in growth did not occur. The cool, moist start to the season in the North Island caused disease pressure from phytophthora root rot (Phythophthora megasperma var sojae) which did not ease for most of the season. In mid October it was predicted that yields could be down 30-40% for the season. However, warmer temperatures after October resulted in production only decreasing 3-5%.
The new varieties being planted over the last few years have not produced their expected higher yields. This is due to experiencing less than optimum conditions required to maintain production.
The area planted in asparagus is expected to reduce in the North Island in the next few years as beds come to the end of their economic life and there is not sufficient confidence in the industry to plant further area.
The February floods in Manawatu resulted in several growers losing all or part of their blocks due to scouring out or being buried under silt. A Feilding grower is reported to have 1 metre of silt over his entire 6 ha block. A survey of vegetable growers reported a total of 22 ha of asparagus were lost in these floods.
The dry conditions in Canterbury suited asparagus production, as it is a drought-tolerant crop. Yields were average, but fern growth was very good, indicating that next years yields will be good, given a normal spring.
The threat of the asparagus rust (Puccinia asparagi) and Phomopsis arriving here from Australia still exists. Growers are keeping a watching brief on this issue.
Carrots
Ohakune growers experienced a very dry season. Some Pukekohe based growers were forced to move additional irrigation equipment to the Central Plateau to irrigate their crops.
Much of the carrot processing has been moved from Manawatu to Hawke's Bay this season. It was reported that 44 ha was lost because of the floods in the Manawatu, and that the high rainfall resulted in more rot than usual. Much of the crop is still to be harvested, but reports so far indicate a good season for carrot growers.
Process Crops
Excellent yields of 100 tonnes/ha of field grown tomatoes were achieved in Gisborne from an area three times larger than in 2002/03. In the peak of the season the Gisborne processing plant could not keep pace with the inflow of high yielding crops, and some Gisborne grown tomatoes were processed in Hawke's Bay.
Management of the tomato crop in Hawke's Bay was made difficult by the weather conditions. The cool spring with periodic rain affected fruit set and size, and therefore early yields were down. Heavy rain and winds in late January and February damaged vines and flowers, affecting the mid to late season crops and encouraging diseases such as bacterial canker and botrytis. However, a sunny dry later harvest period resulted in good quality and yields similar to the previous years averages of 80-85 t/ha.
Efforts continue to be made into finding more sustainable ways of managing tomatoes, particularly in the area of soil management, cultivation and the potential of new techniques such as strip tillage.
The Gisborne season for sweetcorn was satisfactory with average yields at approximately 17 t/ha. The fungal disease Northern Leaf Blight that can defoliate plants caused problems with some crops, particularly in the Tolaga Bay area.
In Hawke's Bay the season started favourably, with rain providing good soil moisture, but the lack of heat units by February resulted in a reduction in yields. Compared with the 5-year average, Super Sweet reduced in yield from 20.5 tonnes/ha to 15.8 tonnes/ha, and the sugary varieties from 21.5 tonnes/ha to 19.2 tonnes/ha. High winds in Hawke's Bay caused some of the crop to lodge (lean to one side) which also had some negative impact on yields. Pest and disease did not cause any issues in crops of sweetcorn grown in Hawke's Bay. However, the green vegetable bug did have a small impact on crops grown in Wairoa.
Sweetcorn harvesting went very well, with processors only reporting 1 or 2 days lost production due to crop maturity issues unrelated to weather events.
While new sweetcorn varieties are consistently being trialled, there were no varieties that stood out from others this season.
Sweetcorn processing companies report increasing restrictions, costs and delays in getting seed in the ground on time due to the need for tests of germination and presence of genetically modified material.
Heinz Wattie reports that 25 ha of organic sweetcorn were grown for them in the 2003/04 year with a yield very similar to that of the Super Sweet variety.
In Canterbury, sweetcorn yields were good in early crops, but overcast conditions in February slowed growth so that harvesting went later than normal, and average yields decreased by approximately 25%.
Despite delays in planting because of a wet spring, the intermittent rain after planting resulted in an excellent season for Hawke's Bay pea growers. The increased use of minimum tillage showed good results, and it is expected that this method will be used more widely next season.
The season was very good for process peas in Canterbury, due to less disease and better conditions at sowing. The extreme heat in January resulted in high bypass rates as peas matured over a condensed time period, and wetter conditions in February reduced quality in late crops. Early snap beans (green beans) were also affected by the dry period, but later crops were above expectation. Broad bean production was good as harvest was completed before the dry conditions occurred.
Covered Crops
Growers of covered crops (capsicums and tomatoes) had a good year, as a shortage of Australian product meant that prices did not fall to the low levels typical of previous years, and also created a niche market for both crops in Australia.
The tomato industry lost 73 growers last season. This reflects a trend to larger production areas operated by fewer growers, 17 of whom now control over 1 ha or more of covered area. Growers in Nelson and Mangere saw the opportunity to realise the capital value of their land by selling it for subdivision.
There was an increase in cucumber production, and while established growers were able to safeguard their markets, new entrants, or those changing production volumes, had more trouble selling their product.
The trend to larger, more specialised vegetable producing operations continues in most vegetable crops. The trend is expected to continue, hastened by the reduction in competition in marketing outlets for vegetables with the merger of two large supermarket chains last year and the specialised technology required to produce vegetables. The graphs below detail the change in grower numbers and area in various vegetable crops over the last 4 years. The number of potato growers, for example, has reduced 17%, from 385 growers in 1999 to 321 growers in 2003. The area planted in potatoes has only reduced by 13% over the same period. Squash growers increased their average area by 25%, from 29 ha in 1999 to 36 ha in 2003.
Number of Vegetable Growers 1999 vs 2003
Area Planted in Vegetables 1999 vs 2003
Financial Factors
Revenue
Potatoes
Despite losses from the Manawatu floods, there has been no shortage of supply and, apart from a sharp rise immediately after the storm, prices have remained moderate.
Brushed potatoes grown in the North Island sold for $250/tonne down from $400/tonne in February following the floods. The seasonal average price was around $300/tonne, similar to that received last season. Washed potatoes continue to receive a significant premium, at between $500 and 700/tonne. The price paid for South Island potatoes is typically $50/tonne less to allow for the cost of freighting product across Cook Strait.
Process potatoes received an average of $170/tonne in the South Island and $220/tonne in the North Island. This is 10% higher than the previous year's average.
Export potato prices are under pressure due to Chinese exports to the East Asian area which is a traditional market for New Zealand. The market to Fiji is fully supplied and as a number of cool stores are full of export potatoes, it is likely that the price will drop over the winter.
China is an ever-increasing competitor for fresh product, including potatoes, as they continue to forge new links with the market.
Potatoes are not being exported from the Manawatu due to potential quality concerns resulting from the floods.
In Hawke's Bay more rain than usual reduced the need to irrigate potatoes, but increased chemical costs because of more need for blight protection.
Onions
Prices have generally been lower in Europe and the United Kingdom (UK) this year. The season began with expectations of good export prices. Unfortunately, these expectations did not materialise, with generally lower prices across all markets.
On average, onion growers have received $300/tonne for their export onions to date. Onion sales have dropped off to the European Union (EU) due to poor quality of some lines. Some growers who have normally sold onions in the period March to May did not sell any at all in 2003/04, which will have an effect on cash flows, and potentially on returns for the year. Some onions are now being exported at a loss because to dump the crop would result in a greater loss. Dumping costs approximately $400/tonne. It is likely that the poor returns will result in a significant drop in the onion crop planted in 2004/05.
Acquisition of enough land at a reasonable price continues to be an issue for onion growers in Pukekohe.
Trials with different onion planting configurations have produced small yield gains and reduced production costs. Also, more intensive pest/disease and size monitoring in crops have successfully provided information which has resulted in grower ability to be cost effective in sprays applications and to target specific markets.
The value of onion exports exceeded $100 million this season. This milestone has not been achieved since 1999, when export values reached $106 million.
Squash
Most Gisborne growers have contracts, which give a maximum and minimum price. For the mid part of the season spot prices plummeted below the minimum price, and exporters had to make up the difference. In the latter part of the season prices lifted slightly above the minimum price, but growers would have barely covered costs due to poor yields. Some crops were not harvested due to the effects of powdery mildew.
On average squash growers received $400/tonne for their squash. This is down 11% on the average price received last year.
The disease pressure during the growing season impacted on grower's expenditure on agrichemicals.
Greens
In late February, March and April 2004 the lettuce price rose to between $19 and $24/crate. As the price is largely determined by supply and demand, the shortage of product meant that most growers could not take advantage of these high prices. This is reflected in the representative price for the year of $9/crate which has lifted slightly from lasts years price of $8.50/crate. Prices have since collapsed in May to be between $4 and $5/crate, which is below the cost of production.
Flooding in the lower North Island caused unprecedented price spikes, with spinach and silver beet receiving $60 and $100/crate respectively immediately after the floods.
Other green crops, except cabbage and broccoli, have received prices per crate that are slightly improved on the previous year's prices. Cabbage prices have remained similar, whereas broccoli prices have lifted significantly with growers being paid on average $16.80/crate for their produce compared with the $13 they received in 2002/03.
Asparagus
Grower returns in 2003/04 were slightly lower, with prices for fresh product averaging approximately $2.30/kg compared with $3/kg in an average season. Reasons for this included the high NZD relative to the yen. Also, product from the US and Mexico continued late into the Japanese market so that the market was already flat by the time New Zealand and Australian product reached it. Prices on the domestic market were kept low because excess product from the flattened export market was sold locally.
Process prices ranged from $1.90-$2/kg. The low returns in Hawke's Bay have resulted in more blocks of asparagus being removed this year. However, it is anticipated that prices will not be affected in the short term.
Some growers commented on the relative inefficiency of some post-harvest operators impacting on returns to the grower. Individual growers have experienced significant variation in their return per kilogram, depending on who they have used as a post-harvest provider.
Greenhouse Crops
At times tomatoes were selling below the cost of production. Some tomato growers switched production to cucumbers, leading to an over-supply and reduced prices for cucumbers.
Process Crops
Prices paid for tomatoes were on a par with last season. However, the average brix (sweetness) of crops in the pricing mechanism reduced returns from crops harvested in February during increased rainfall and decreased light hours.
Prices paid for processing sweetcorn ranged between $150 and $170/tonne. This is slightly down on returns achieved the previous year. The reduction in yield meant that returns to growers were marginal and it was uneconomic to lease land to grow sweetcorn. Prices have reduced as growers have become more proficient in achieving high yields with the newer supersweet varieties.
Process prices have remained static for the main crops of peas and beans.
Net Result
The gross margins for the various vegetable crops provide an indication of the average farm gate return per hectare for the season. The gross margin consists of the revenue for a particular crop less all the direct costs associated with growing that crop. The figure does not include overheads such as administration, debt servicing, taxation or drawings. The actual result for an individual grower may be quite different to this due to their particular circumstances.
Gross margins can vary considerably for the same crop. For example, the gross margin for onion growers in the North Island is $4,130/ha, while the South Island is $1,480/ha. The later selling season and lower yield for the South Island growers has meant that they have a significantly reduced gross margin. For some, their situation may be worse than this as they may be unable to sell their produce. It is anticipated that this may result in a reduced area of onions being planted next year.
Table 3: Vegetable Gross Margins 2003/04
Price |
Yield |
Gross Margin | |
South Auckland/Waikato |
|||
Asparagus |
2,300 |
3.5 |
2,265 |
Onions |
300 |
50 |
4,130 |
Potatoes - table |
285 |
50 |
3,095 |
Greens |
|||
- Cabbage |
8.00 |
2,000 |
2,435 |
- Cauliflower |
8.50 |
1,735 |
1,930 |
- Broccoli |
16.80 |
1,000 |
5,235 |
- Lettuce |
9.00 |
3,545 |
7,355 |
Hawke's Bay/Gisborne |
|||
Asparagus |
1,900 |
3.6 |
1,680 |
Peas - process |
310 |
5.5 |
930 |
Squash |
400 |
13.0 |
965 |
Sweetcorn - process |
150 |
16.5 |
1,360 |
Canterbury |
|||
Beans - process |
210 |
15.0 |
1,355 |
Peas - process |
272 |
7.6 |
1,130 |
Sweetcorn - process |
165 |
16.0 |
1,210 |
Potatoes - process |
170 |
42.0 |
3,035 |
Onions |
220* |
35.0 |
1,480 |
Source: Agriculture New Zealand Ltd
The difference in marketing strategies for asparagus growers in the two major growing areas also has a significant impact on their respective gross margins. Growers in the Waikato area traditionally sell their produce as fresh product, whereas Hawke's Bay producers are more likely to sell their produce to processors. The drop in the process price in 2003/04 has meant that process growers only received $1,680/ha, less than half that of their fellow growers in the Waikato, who received an estimated $2,265/ha.
Green produce growers received gross margins of between $1,930/ha for cauliflower and $7,355/ha for broccoli. The gross margin for broccoli and lettuce growers improved significantly on the previous year's return, reflecting better control of the lettuce aphid and higher market returns.
Poor yields and market prices impacted severely on the financial result for squash growers. The gross margin of $965/ha did not cover overhead costs, and it is expected that many more squash growers will exit the industry.
The gross margin for process crops in the South Island ranged from $1,130/ha for process peas to $3,035/ha for process potatoes. These farm gate returns are similar to the previous season except for the potato gross margin, which dropped due to a decrease in the price paid for the crop.
Issues and Trends
VegFed have been complimentary of the way government agencies and the service sector have supported growers affected by the severe flooding that occurred in the lower North Island this year.
Labour continues to be an issue for growers, partly because of increased costs, and partly because of competition from other industries. There is a view among growers that semi-skilled immigrants should be allowed into the country on temporary work visas to undertake tasks such as weeding and harvesting. This is particularly the case for asparagus growers, who can only provide staff 4-6 hours' work per day harvesting. People who previously worked in these jobs are moving to employment providing longer working hours.
Increasing costs of compliance are a concern to process and fresh vegetable producers. For example, the change in pesticide regulations with the implementation of the Hazardous Substances and New Organisms Act and the Environmental Risk Management Authority will tighten up the availability and use of some chemicals. The legislation will mean that test certificates will be required for locations where hazardous substances are stored, and growers will need to become approved handlers. Another example of compliance issues is local government introducing new consent requirements such as the need for consent to discharge water from production land (such as nutrient solution from greenhouses). For a limited volume of discharge, growers will have to pay a $300 consent fee, but increasing volumes of discharge will cost the grower $700 for the consent, and they will need an engineers report certifying the efficacy of the discharge system.
Growers, via their VegFed representatives, continue to work with District and Regional Councils on issues that impact on their land management. Issues that have progressed as far as appeals to the Environment Court include:
- agrichemical use as a permitted activity;
- land use and water quantity and quality;
- noise issues with audible bird-scaring devices;
- proposed land use changes around urban areas;
- the use of cultivation as a normal farming practice; and
- the size of riparian management zones.
The continued availability and quality of water for irrigating crops continues to be a concern for growers. While growers are able to meet the needs of their crops with existing supplies of water, they are wary of any moves local government may introduce to limit access to water.
The horticulture industries are presently reviewing their industry structure, with the potential of a merger between VegFed, Fruitgrowers Federation and BerryFed. A merger would see the formalisation of an existing close working relationship between these organisations.
VegFed awaits the result of the JAS-ANZ audit of the New Zealand Fresh Produce Approved Supplier (NZFPAS) programme which, if successful, would give NZFPAS equivalence to the EUREPGAP protocol. This would reduce the requirement for growers to comply with two quality assurance programmes, one for the local market and one for exports into the EU. NZFPAS gained an endorsement as being equivalent to the Global Food Safety Initiative, a programme run by a task force representing 70% of all food retailers worldwide.
Good weed and disease-free cropping land for purchase or annual lease is becoming a scare resource. In Gisborne top quality bare land is selling for over $37,000/ha and annual rental rates are reaching up to $1,700/ha. Larger operators are now going further afield to lease large areas of good quality land. In the past 2 years, the Mahia Peninsula has become an important area for early crops. Lease land for cropping in Hawke's Bay is highly sought-after. Several major growers advertised in local papers extensively, and for long periods of time last winter and spring, and one has already begun advertising again this year. Grapes have been planted in many areas which have previously been used for vegetable cropping. This trend may begin to slow as some grape growers experienced difficulties marketing their crops this year, and less profitable blocks and varieties may start to be removed. In Waikato real estate agents say that cropping land is selling for $25,000-$30,000/ha. However, in Northland, the agents believe that the prices for kumara-growing land have peaked and in Canterbury, the amount of land that has been converted from cropping to dairy in recent years may revert back to cropping due to recent lower dairy returns.
Producers and processors are noting increases in vegetable seed prices that exceed the increase in other input costs. They believe wholesalers may be making additional margins, rather than the seed companies who are producing new cultivars. Providing markets with assurances on the absence of genetically modified material in produce is also adding to the cost of seed for establishing crops.
All growers are very aware of, and concerned about, the potential danger of incursions of new pests and diseases into New Zealand. Growers have greeted the increase in inspection of sea freight containers favourably. Growers have also contributed to a Sustainable Farming Fund project called Project POP-I ("Protecting our Produce Industry") to map the area of vegetable production in a national database. The project is using grower-supplied data generated from a survey to add to the existing AgriBase database operated by AgriQuality.
Air freight for a number of vegetable crops is less of a problem to Australia than was reported last year, due to more aircraft movements over the Tasman. However, there are still problems with space on the Japan route. The anticipated problem of air freight space to the US did not eventuate, with other flights replacing those cut by United Airlines.
Access to new Asian markets continues to be restricted by non-tariff phytosanitary barriers. Recently progress has been made with South Korea and Taiwan supplying a set of protocols, mainly to ensure imported product is free of potato cyst nematode (PCN). Korean authorities have recently removed a trade barrier imposed against New Zealand produced squash. Some recent shipments have been rejected due to the presence of the fungus Verticillium huteo var album. New Zealand authorities have consistently argued that the fungi should not be a quarantine issue as it does not damage the product, and evidence suggests that it is already present in Korea. Korean authorities have since removed the fungi from their quarantine list.
Organic vegetable production is relatively static in New Zealand. In Gisborne, the area in organic production is reducing while in the Canterbury region, the area is increasing. It appears that the integrated production systems in Canterbury, where growers are often also livestock farmers, better suit the rotation requirements for organic production. The less integrated growing systems in Gisborne and Hawke's Bay make it more difficult for growers to maintain their soil quality and fertility under organic systems.
The Franklin Sustainability Project finished at the end of June 2004. Over the past year there has been a considerable amount of grower activity to install or upgrade erosion control measures. As part of an advocated multi-pronged approach, councils began to take a tougher line where growers were not meeting the erosion management guidelines developed by the project.
The industry has established six weather stations in the Franklin District. The raw data and disease models for Late Blight, Downy Mildew and White Rot are available on the Internet at www.pgsl.co.nz.
There is growing concern in the Waikato about increasing nitrate levels in the ground water. Environment Waikato are proposing the application of a cap of 60 kgN/ha after which, if a farmer or grower wants to apply more, then they will need to provide a nutrient budget using a model like Overseer. How this will work in practice is still being reviewed as there are a number of concerns, not least of which are the assumptions used by some of the nutrient models, and conflicting research. A significant hurdle is the economic impact that reduced nitrogen applications can have. The cost of nitrogen is relatively cheap compared with the significant lift in yields that can be achieved.
Growing process and vegetable crops on Maori owned land is one of the four industry and landholder initiatives likely to be developed under the government's major regional initiative for the Tairawhiti district. After more than 2 years of discussions and planning, funding is expected soon for a programme commencing this spring in the Ruatoria area.
During the year the American owned food company, S K Foods, completed their takeover of the publicly listed Gisborne-based processor Cedenco. The company also processes vegetables on behalf of Heinz Wattie's.
The production of potatoes is static, with new cultivars replacing some of the older ones. An increasing amount is being used for processing, but is balanced by the reduction in take-home packs of potatoes. The processing is mainly for catering, precooked meals, chips and fries.
New genetic potato material continues to be banned from entering New Zealand. This has been an ongoing issue for the past 4 years. There are currently 76 items on the import standards that plant importers must prove their crop is free of. Although progress has been made this year, there are still a number of items which cannot be tested for. There is also no level 3 quarantine facility for potatoes, although HortResearch is currently investigating establishing one.
The continuing poor performance from some onion exporting companies to the EU has renewed calls for the onion industry to tighten its standards. The quality of New Zealand onions has fallen from a premium product 10 years ago to a commodity product, only sought in the market when there are shortages. A reduction in the area of onions is expected next year.
Research is continuing to try and overcome problems caused by the lettuce aphid. The insect is a vector for the tomato spotted wilt virus, which can render lettuce unmarketable. When the aphid was first discovered, growers used broad-spectrum insecticides to control it. Recent research has indicated that this might have detrimental effects on natural predators of the aphid. The insect may be controlled by natural enemies at certain times of the year. Other work includes developing pest action thresholds to determine when to spray.
The research group LandWISE has continued their investigations into strip tillage in the Gisborne and Hawke's Bay regions. Strip tillage involves cultivating only the area directly around where a seed is to be sown, rather than the whole paddock. It can also involve the use of controlled traffic lanes in paddocks, which are used for all operations such as tillage, planting, fertilising, spraying and harvesting. The benefits are a dramatic reduction in soil compaction, and increased yields. Initial trials have proved promising. It remains to be seen whether growers or contractors are prepared to invest in a whole range of new machinery to fit in with the concept.
With a very difficult season many squash growers are beginning to question their future in the industry. The Pacific Islands, and particularly Tonga, are strong competitors. Some growers believe that they are just pawns of the Japanese, as Japan supplies the seed, the shipping, and buy the majority of the crop.
Phytophthora sp resistant varieties of asparagus are being fast tracked as the fungus appears to be becoming resistant to chemicals used to control this disease. Two or three promising varieties are going into national cultivar trials this year.
The AGM of the asparagus industry, due shortly, is to hold workshops to look seriously at the issues of sustainability in the asparagus industry. However, because the industry is small, it has limited funds from levies to assist in resolving these issues.
Weed control in process vegetables under shorter rotations is becoming more critical. Annual ryegrasses that are used for winter feed are becoming a problem in process carrots, groundkeeper potatoes are showing up in freezer peas, and brassicas are appearing in more crops due to an increase in brassica seed production in Canterbury.
Work is being carried out on use of a "tackifier" or polymer to put a film on the soil to prevent erosion. Cover crops such as oats or rye-corn are being trialled, and are being planted every third or fourth row to provide a windbreak and prevent soil erosion.
Growers have raised concerns about the risk of contamination of their crops if genetically modified (GM) crops were grown in future. The recent flooding in Manawatu has prompted questions around the ability to keep GM crops contained in other adverse climatic events.
A recent survey calculated that North Island tomato growers' energy use is 27 MJ/kg of tomatoes produced, while South Island growers use twice as much energy, at 42 MJ/kg. A megajoule (MJ) is equivalent to 21 kg of coal, 35 litres of diesel, or 41 m3 of natural gas. The greenhouse industry has commissioned research into the impact of the proposed carbon tax on their industry. The research reported that the annual cost of the carbon tax for the industry may be between $3.9 and $4.9 million. The average cost for growers is calculated to be $16,750 for North Island growers and $20,000 for South Island growers.
Northland kumara marketers have been successful in expanding the export market into the UK. This success could lead to a doubling of the area of kumaras grown in Northland. However, growers in Northland are concerned that unless this planting is increased slowly, there may be "teething problems" with the development of the market. It is estimated that there are 1,200 ha of kumara grown in New Zealand, producing approximately $1.2 million of export product.
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
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