Issues and Trends
The continuing lack of profitability in the Hawke's Bay pipfruit industry will see further on-orchard restructuring with more growers exiting the industry, and larger growers either buying additional land at low capital values or leasing. Many entire orchards are already being removed, ready to be planted in another crop. The scale of removals will be very dependent on market performance this year. Bankers are watching the situation with interest.
When asked about industry restructuring, growers have several points of view, ranging from those who want complete single desk status to remain with ENZA, to those who want complete deregulation. Growers also have widely differing opinions on the export consents process. The general feeling is that it is useful for New Zealand to be using marketers that are complementing ENZA's effort. Some growers have raised the kiwifruit industry alternative, whereby the benefits of niche marketing outside of the single desk are put back into the pool so all growers benefit. Most growers still believe the single desk philosophy is the preferred option.
The separation of ENZA Cool from ENZA Limited has seen competition for all on-shore services to the ship's side. Packaging and coolstorage costs now become grower controlled costs. Growers feel the change has not yet delivered savings. Some consider savings will only come once the industry shrinks and the post-harvest sector has to compete more to attract a limited volume of product. Many growers feel the restructuring process has been forced on the industry too quickly resulting in many growers not fully understanding what the restructuring impacts will be.
Most growers consider on-shore restructuring has worsened their cashflow position, particularly those paying for coolstorage costs as the crop is shipped. The orchard is now carrying more overheads than in the past. Many growers feel a real lack of confidence in their businesses at the moment, which is stifling further investment.
Hawke's Bay has seen a move in recent years to a few very large packhouses packing the majority of the crop. Growers are concerned these large packhouses have too much power. Some industry leaders are predicting smaller and medium sized packhouses will be reinstated giving large growers more ability to add value to their product.
While most established growers were content with the final ENZA share allocation process, many new growers were disillusioned that after months and years of consultation and grower agreement on a share proposal, the Minister was able to overturn it so easily. Although shares have been issued, there is very little knowledge as to what the ENZA shares may be worth. Most growers consider the returns for their fruit to be far more important than any share dividend.
There is widespread feedback that the consents process needs to be handled independently with little interference by ENZA. Growers were concerned that towards the latter part of the consent process, ENZA became too involved in the final decision making.
Growers are adamant they need a good selling year for this season's crop, but are not confident that that will be the case. Recent market reports suggest the market is going to continue to be difficult. For grower confidence to be restored they claim they need four things - an efficient marketing company, a competitive exchange rate, access to a wide range of markets including the likes of Australia and Japan, and the removal of production subsidies that growers in other countries receive.
Unlike a few years ago when growers were removing Granny Smith, Red Delicious and Gala, grower attention has now turned to the major varieties, Royal Gala and Braeburn, and to a lesser extent, Cox Orange and Gala.
There is still confusion as to what varieties to plant. Preferences appear to be for Pacific Beauty, Pacific Queen, Pink Lady and to a lesser extent, Galaxy. There was also some initial interest in the new HortResearch release T273, but bad publicity in Hawke's Bay regarding its 'parrot beak' disorder has most growers waiting for more information.
Replanting on more dwarfing stocks is becoming more evident. Redevelopment is difficult for most growers at the moment, because they do not have any spare disposable income for the large investment required. As a result, more growers are prepared to pull blocks of trees out and leave them bare for a season or two. This is reflected in the vacant, plantable area now shown in the orchard model.
The industry is continuing to experience the frustration of a lack of good experienced, fit and motivated people to harvest the large crops. This is particularly critical during the start of the harvest, when harvesting varieties are very prone to over maturity. Most growers would like to see the freeing up of immigration laws so there are sufficient young people to harvest the crop.
Most growers are now growing under the IFP system. They believe the programme has been introduced to the industry in a very effective manner, with their only concern being that they do not appear to be achieving any premium for the product overseas. Organic production continues to grow and it is estimated that 1ÿmillion cartons of organic and transitional organic fruit will be exported from New Zealand in 2001.
Recently a group of IFP growers applied to ERMA to introduce a parasitic wasp of mealy bug into New Zealand. Its introduction would virtually eliminate the need for organo phosphates on many New Zealand pipfruit orchards. There have been objections to this from the Department of Conservation.
Growers believe the exchange rate needs to be attractive for exporters if they are to survive as a sustainable industry. The exchange rates in the past of NZ$0.60-$0.70 to US$1.00 placed the industry in a position where it was unable to compete globally.
Growers are really looking for support from their financiers to see them through this extended period of difficult times.
Growers would like the Government to change the rules which require redevelopment of stock to be fully capitalised. This is a major restriction for growers in their current financial position.
ENZA Foods, the juice processing company, looks set to process a record juice crop. This is as a result of crop management programmes, particularly Braeburn, and an increase in the rate paid to growers for orchard run fruit. This year ENZA Foods lifted the orchard run price from 6c/kg to 8c/kg, and lifted the packhouse reject price from 2c/kg to 3c/kg. This is still a very low price compared to process fruit prices paid elsewhere around the world.
The biggest issue facing all growers at the moment is profitability, and until profitability is restored, many of the other issues they would like to address have to be put on hold.
Grower confidence is currently at an all time low. Most growers consider the next two to three years will continue to be difficult and they see marginal operators in marginal areas disappearing from the industry, resulting in a general downsizing of the industry.
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Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
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NEW ZEALAND
Phone: +64 4 894 0623
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