Growing a stronger kiwifruit industry

As the kiwifruit industry grows it’s making use of new technologies, but there are still growth challenges NZ stakeholders are trying to tackle together.

4-minute read

It was surely one of the horticultural industry’s greatest marketing coups when in the late 1950s, we Kiwis cheekily renamed the Chinese gooseberry to kiwifruit.

That effort to boost the fruit’s sales prospects in our export markets paid off – and it’s an export success story that’s continuing today. New Zealand’s kiwifruit industry is bouncing back strongly from the devastating Psa virus, which first emerged here in 2010, to now pursue some aggressive global growth targets.

Zespri, which markets New Zealand’s kiwifruit crop (and is the world’s largest marketer of the fruit), is aiming to grow its global kiwifruit sales from the $2 billion achieved in the 2016/17 season to $4.5 billion by 2025.

With a focus on increased production, particularly of the premium SunGold variety, a strong ‘NZ Inc’ marketing story, and the development of innovative new varieties such as red kiwifruit, industry growth is also being buoyed by global market trends. These include a growing focus on health and wellness, rising middle classes in emerging markets, and increased focus on food safety and sustainability.

Improving kiwifruit orchard management

It’s a picture that presents huge opportunities for kiwifruit industry players – along with some challenges.

Tauranga-based BNZ Senior Partner, Barney Jackson has been involved in the kiwifruit industry for more than 20 years and has significant experience banking growers in the sector. He’s seeing strong industry growth evidenced on a number of fronts.

Demand for orchard land is highly contested, with buyers now expecting to pay around $1 million per hectare for orchards planted in SunGold. Jackson says the overall orchardist population is ageing, and some older growers are capitalising on high prices to sell. There’s also a trend, he says, towards consolidation, with fewer orchardists but larger landholdings, meaning existing New Zealand kiwifruit growers are getting bigger.

Another trend Jackson has observed is the increased quality and professionalism of on-orchard management practices, which is leading to greater yields that the industry will need to meet its growth targets. The kiwifruit industry, by virtue of having its products marketed through a single body, is highly collaborative, says Jackson, which means growers are attuned to learn from each other and share best practice.

Greenfield development is another part in the growth story, and Jackson notes many of these new orchard developments are also harnessing best practice – for example, using GPS technology to optimally position planting infrastructure – that will ultimately result in higher crop yields.

Meeting challenges

However, Jackson has observed that growth may also exacerbate a perennial pain point for the industry – labour shortages. International students, international working holiday workers, and those entering the country on the Recognised Seasonal Employment (RSE) scheme, are all seen as crucial for meeting the shortfall in domestic labour supply. However, such offshore labour sources can be vulnerable to changes in immigration policy.

For growers looking to expand their operations, access to capital is another crucial issue.

“Our financial knowledge of the industry, and what’s viable,” says Jackson, “is very strong and we support their growth aspirations both from a banking and a partnership relationship perspective.”

Jackson’s industry knowledge came to the fore during the Psa outbreak, helping support growers through the crisis and even assisting some seasoned operators to expand their operations as more fair-weather investors leapt out of the industry.

The bank has forged strong relationships across the sector allowing it to also support growers by introducing them to business best practice, other intermediaries that will help them grow their operations or helping retiring orchardists manage their wealth.

Processing power

BNZ’s deep and wide relationships across the industry are also helping it assist customers on the post-harvest side of the sector.

Mark Allen, a Tauranga-based BNZ Partners Corporate Partner, says increased fruit production requires an accompanying expansion of infrastructure to process the fruit, with substantial growth occurring in the packhouse sector.

For example, BNZ has financed the development of a new 25,000 square-metre packhouse in the Tauriko Business Estate area near Tauranga – the country’s first greenfield kiwifruit packhouse development in many years. Built by Mount Pack & Cool, known as MPac, the facility incorporates leading-edge French sorting equipment and will allow the company to substantially increase their processing capacity to over 10 million trays of kiwifruit per season.

Despite the strong growth outlook, success for those working in the horticultural industry, as in any agribusiness, still hinges on myriad factors, not least the weather. BNZ’s strong involvement across the industry, both before and after harvest, however, helps the bank maintain a steady hand in supporting its customers. Allen also believes the BNZ Partners model, which supports seamless communication between the agri and corporate business sectors within the bank, leading them to operate as a single wider team, is what allows the bank to provide customers with a superior service.

“We back a lot of the growers. We’re out there talking to them, which means we’re aware of any issues coming down the line that may affect our packhouse customers,” explains Allen.

“Last year, for example, when growers experienced some delays in picking due to weather events, we could see this was going to cause some revenue delay for the packhouses, so we extended seasonal overdraft and finance facilities to those customers when our competitors didn’t. We knew a lot more than the other banks did – and that was a win for us and our customers.”