23 Jan 2018
The success story for New Zealand kiwifruit is a remarkable one.
A bounceback from vine-killing disease PSA, high consumer demand for the fruit, and 2017’s record crop saw sales grow to $NZ2 billion.
“It’s kiwifruit envy” Bay of Plenty grower Andre Hickson says. “We’re flavour of the month, hence why everyone is looking at us and going ‘what are we doing differently, what is that industry doing that we’re not?’”
"We have to grow. If we don’t fill the supermarket shelves someone else will.” - Hickson
He’s not wrong – the scene is set for growth. Industry body Zespri has set the target of growing global sales to reach $NZ4.5 billion by 2025.
“We have to grow,” Hickson says. “If we don’t fill the supermarket shelves someone else will.”
“China and other countries are looking at new varieties in kiwifruit so we have to grow the market that we have to protect the market we have. So there are big opportunities for kiwifruit.”
Lack of available land in the region for greenfield development also highlighting potential for more growing to expand to Northland and Hawke’s Bay.
Those opportunities come with challenges. Demand for kiwifruit orchards has pushed values up and orchards are selling at record prices. Bay of Plenty region, where the majority of NZ’s kiwifruit is grown, has seen orchard values double in some cases.
But before converting land from existing use (like dairy or red meat farming) a number of factors need to be considered, including local council regulations, water rights, land suitability, labour and supporting infrastructure.
The vast amount of capital will also be required to build the scale and infrastructure required to support more production.
That would be Pseudomonas syringae pv. Actinidiae – a mouthful for a reader and more than a handful for NZ’s kiwifruit growers who fought the nefarious bacteria as it infected their vines over the best part of the last decade.
Carried by weather events, tools and human activity, PSA carries no risk to humans or animals but is deadly to vines.
First discovered in NZ in late 2010, the virus spread to a point it almost wiped out the higher-value Hort16A gold variety of fruit, decimating crops and reducing the value of orchards to flat land value.
Independent body Kiwifruit Vine Health was set up in response to manage the crisis – and with its success came a return to optimism in the industry. Returns recovered and orchard values with it – and are now showing no signs of slowing.
With 12,694 hectares and 2,435 growers spread across the country, NZ is the second highest producer of kiwifruit in the world (Italy is first!).
Kiwifruit is the country’s largest horticulture export earner.
Industry body Zespri’s investment in development of new varieties and the quality of its brand has helped increase global demand for NZ kiwifruit. Global sales rose by $NZ694 million from the 2014-15 season to the 2016-17 season driven by the success of both green and gold varieties.
The majority of NZ kiwifruit is grown in Bay of Plenty, other growing areas include Northland, Gisborne and Hawke’s Bay and Nelson.
It wasn’t long ago PSA ripped through the sector, halting business, halving land values and in some cases leaving farmers no choice but to walk away from their orchards.
Talking to growers like Hickson who made it through and are now reaping the rewards, the pain of recent history is sharp in their minds.
On a walk through his orchard he points out they haven’t eliminated the disease just found ways to minimise the risk.
“This (SunGold) variety is tolerant, but it still has PSA,” Hickson says. “Why this bit lives and this bit dies we don’t know. It’s still a risk, but we live with it.”
Horticulture is like any business, he says, it’s about managing risk.
“The biggest risk is always the one you don’t identify – and that is what PSA was. We didn’t even know it was on the radar.”
Andre and his wife Helen have built a successful business, not just in kiwifruit, also planting avocado trees and continuing the family dairy operation.
“In 1890 my great grandfather came here from Ireland, my father and his brother farmed it successfully for a number of years,” Hickson says.
“I came back in 1983 just after my father Pax Hickson planted the first vine in 1979 and we grew a diversified business with dairy and kiwifruit.”
That strategy has helped protect them over the years.
“We’ve lived with dairy being up and kiwifruit down and vice versa,” he says. “So one has subsidised the other when the markets haven’t been kind to us.”
Hickson is quick to point out while it’s been a rocky ride, it has been fun.
Latest research from ANZ outlines the growth forecasts and challenges facing the sector.
Biosecurity remains a big risk, and combined with other challenges facing the sector – labour, potential migration cuts and minimum wage increases.
The vast amount of capital required building the scale and infrastructure required supporting more production as well as access to land, water and resource consents – mean there is much to consider before cashing in on the SunGold rush.
Managing Director for Commercial & Agri Mark Hiddleston says despite this kiwifruit is a rapidly growing industry which has a strong governance structure and proven ability to innovate and respond to changing market dynamics.
“The trick for the kiwifruit industry will be sustainable growth over a number of years,” he says. “Making sure we can keep markets alive and deliver to consumers on a consistent basis while the whole sector steadily grows.”
That growth will create jobs and increase earnings which will flow through to regions and communities – the benefits of getting it right will make for a success story broader than the sector alone.
Briar McCormack is bluenotes NZ editor
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
23 Jan 2018
31 Mar 2017