NZ apple growers likely to beat $1 billion export target early on rising prices, higher productivity

Gary Jones, Pipfruit New Zealand

New Zealand apple growers will probably reach $1 billion in exports ahead of their 10-year 2022 target as the industry benefits from higher productivity and rising prices.

The apple industry, New Zealand's second-largest fresh fruit export after kiwifruit, has raised export prices to offset the negative impact of a higher New Zealand dollar on returns, said Gary Jones, business development manager at grower organisation Pipfruit New Zealand. Better access to seasonal staff through a 2008 government scheme has helped orchard owners raise production.

New Zealand's apple industry, which accounts for a quarter of the southern hemisphere's fresh apple exports, is heading into its main three-month harvesting period. Pipfruit NZ plans to drop its compulsory grower levy for research and development to 1 cent a kilogram this year from 1.25 cents last year as it benefits from the extra revenue gleaned from a larger crop.

"If we see more consistency of return like we have over the last couple of years and we see that for another year or so, I think we would have confidence in saying that we would easily achieve that billion dollar figure before 2022," Jones said. "If we have another year or two like we have in the last couple we are likely to think that we have probably been a bit soft and needed to have brought that forward."

New Zealand apples sell for a premium over rivals by as much as 20 percent and sales are benefiting from increased affluence in Asia and better access to markets, Jones said.

Apple exporters are exposed to the US dollar, euro and British pound with gains in the New Zealand dollar crimping returns.

"We really really have been up against the currency in terms of trying to get returns," Jones said. "We have been able to raise the premium in parallel with the increase in exchange rate. Everyone has cooperated to allow us to maintain enough margin to keep going as an industry and so we have been able to reinvest strongly in the business."

Pipfruit exports were worth a record $500 million last year, spurring demand for nursery trees and root stock, he said. While pears are included in the pipfruit figures, they account for just 3 percent of the total, which is dominated by apples.

"At the moment there is money in the industry being used to reinvest in it and grow," Jones said.

This year's apple crop is expected to slip to 505,000 metric tonnes from 550,000 MT last year due to seasonal patterns which dictate a smaller harvest every second year following a frost in 2008. An estimated 308,000 MT are destined for export, from 325,000 MT last year, according to Pipfruit NZ.

Fruit will likely be larger and therefore more valuable this year, as trees produce fewer apples due to the biannual swing and warmer weather, Jones said.

The government's Recognised Seasonal Employer scheme, which enables Pacific Island workers to help with the harvest, has also boosted industry returns, Jones said. Orchard owners taking part in the scheme had raised production by a third and their orchard area by 20 percent over the past five years.

"It's been transformational for the industry," Jones said. "The RSE scheme has allowed us to be much more productive, allowing us to provide the fruit in optimum condition with optimum value and that has allowed us to capture a lot more value and allowed us to survive against the incoming tide of the exchange rate."

(BusinessDesk)

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