Kiwifruit industry going strong
The story from 2012 onward has been one of strong and continuous growth with steady increases in total production areas, improved yields and strong brand recognition.
Demand for kiwifruit globally is expected to grow steadily over the next few years, well supported by strong brand development and education from Zespri, who are proactively investing in expanding its markets and protecting the premium positioning for all of their kiwifruit varieties.
Chris Boyd, Executive Director of Rural and Agribusiness Valuation and Advisory at Colliers, says the industry is emerging strongly and with plenty to be optimistic about, following a period of structural changes after the PSA outbreak in 2010 and is now focusing on the new IP-licenced varieties.
“Productivity and profit growth in the industry are currently driven by the Gold G3 variety which is gaining significant momentum. The Gold G3 cultivar proved to have greater resistance to PSA, provides better yield and is particularly well accepted in Asia.
“With the conversion of Green to Gold G3 along with greenfield development the mix of plantings is changing. The total production area is now close to 13,000 hectares having surpassed the pre-PSA level with Gold G3 increasing due to the release of new licence and Green reducing with the conversion into Gold G3.
“Both Green and Gold G3 have shown greatly improved financial results. Average industry financial performance of Orchard Gate Return (OGR) per hectare has also shown a significant upward trend from $48,989 to $82,624, a 69 per cent improvement over the last five year period. Gold G3 is, however, the superstar with the industry current average OGR forecast at $158,722 per hectare compared to Green at $70,021 per hectare.
“The sales volume of the last two years belies the ongoing strength in the industry and reflects the lack of properties coming to the market as owners chose to hold rather than sell due to current returns. The market fundamentals and crop price expectations are strong within the industry fuelling the expectation of continuing and increasing value levels.
Boyd says that investment activity is likely to remain strong in both greenfield development and post-gate infrastructure to meet the demand. As the availability of suitable land for planting is limited, some investors are looking to plant the appropriate land within larger blocks while others are prepared to undertake extensive land contouring to achieve the required land quality for planting, pushing the values per canopy hectare even further.