Like the dairy industry’s Fonterra, the kiwifruit industry’s giant Zespri has had a golden year. It has reported record returns for 2020-21, with a net profit of $290.5m (up $90m from the previous year) after achieving total fruit sales revenue of $3.5bn (up 14%).
It further highlights the strength of NZ’s rural economy during a period when the Covid-19 pandemic underlined the fragility of global trade.
Zespri’s global sale volumes were up 10% on last season to 181.5m trays.
The company said increased sales, the ongoing expansion of Zespri SunGold kiwifruit production and great quality fruit lay behind the strong returns.
CEO Dan Mathieson said the results would see earnings spread through many regional communities in NZ.
“We’re delighted a record $2.25bn will be returned to the NZ kiwifruit industry. The unity of our industry allowed us to respond effectively to incredibly difficult conditions around the world”.
Looking ahead, Zespri is confident the season already underway will produce yet another record breaking crop.
The kiwifruit industry has a fresh ace up its sleeve, with the gradual expansion of production of a new variety, Kiwifruit Red, to reinforce the spectacular success of SunGold kiwifruit.
There are 5,483 productive hectares of the gold kiwifruit cultivar, commonly known as Gold3 or SunGold, licensed in NZ. The cultivar was fast-tracked to commercial launch in response to the identification of Psa in 2010, and has been the major driver of the kiwifruit industry’s expansion.
SunGold’s market performance has been very strong and, as a result, Zespri released an additional 400 hectares of licence in 2016, 400 hectares in 2017 and 750 hectares in 2018, 2019 and 2020.
In 2020, 150 hectares of licences for the red cultivar Red19 were released to NZ growers. The new cultivar is subject to provisional plant variety rights (PVR) protection in NZ and elsewhere in the world. Based on the current expected market demand of 15 million trays in Asia during the current supply window for Red19, Zespri plans to license 1,500 hectares between 2020 and 2023.
Point of Order reckons Zespri should follow Fisher and Paykel’s example in allocating a chunk of its profit as a profit share not just to its staff but to the clever scientists who have produced the new cultivars.
Other cultivars are understood to be in the process of being tested in the laboratory.
Those cultivars give the NZ industry a marketing advantage over growers of the fruit in other countries.
Kiwifruit continues to achieve increased returns per tonne exported. In 2018 this was $3,661/tonne, and increased to $3,989/tonne in 2020.
Much of the growth is from a 69% increase in the value of exports to Japan to $67m in 2020.
Japan, which eliminated its tariff for kiwifruit under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, has replaced the European Union (which still imposes an 8% tariff on kiwifruit) as the number one export market. This is the first time since 2012 that Japan has been the most valuable market for kiwifruit.
The EU and China have increased in value by 25% and 24% respectively. These top three markets take 74% of exports.
The top ten countries have all shown an increase in export value from 2018 to 2020, and together are 95% of the total export value. Vietnam has shown strong growth, increasing by 86%.
Even though the kiwifruit industry has enjoyed spectacular success it is running into headwinds including industry capacity constraints, rising costs and securing enough people to get the fruit to the world, as well as pandemic-related disruption to shipping and distribution in some markets.
For growers there are still the memories of the devastating effects of the Psa bacterial canker disease, the outbreak of which in November 2010 rapidly caused widespread and severe damage. It is now well managed year-round through monitoring, canopy management, spray protectant use, hygiene and movement controls.
Psa is present in other countries including Italy, Japan, South Korea, Chile and, most recently, Australia. There is no current cure for the disease.