“This can be prohibitive for new entrants. The two major challenges for young new entrants to the kiwifruit industry will be around cost and knowledge.”
He said NZKGI was working with other industry bodies to help growers wanting to upskill, and speaking to banks about topics such as rural lending to ensure growers and banks understood each other’s positions.
Bond said it was great to see new growers and investors coming into the industry during this “time of rapid growth when capital is required”.
“Horticulture is a cyclical industry and investors should have a long-term perspective when it comes to getting results.”
SunGold kiwifruit licences sell for less money
A Zespri spokesperson said 250ha of SunGold kiwifruit licence was auctioned last month compared to 348ha last May.
In the unrestricted pool open to everyone, 104.72ha of SunGold was released at $424,000 per hectare, compared to $700,000/ha in 2023.
In the restricted pool for growers wishing to convert green orchards to SunGold, 153.47ha was released at $424,000 per hectare, compared to $678,000/ha last year.
Prices excluded GST and were set using a new open ascending-price auction mechanism where all successful bidders paid the same licence price.
Every year Zespri reviewed global market conditions to understand the level of demand for its kiwifruit at the value the export marketer targeted to return to growers.
“Global demand continues to grow off the back of investment from Zespri and, despite a number of headwinds in the last two seasons we believe the opportunities to create value for New Zealand growers are significant.”
Kiwifruit orchard prices fall
Bayleys country, lifestyle and horticulture sales agent Snow Williams said kiwifruit orchard sales had slowed in the past 18 months but there was still demand if the price was right. And he had buyers.
High interest rates had affected sales, however, and hurt growers who borrowed when orchard prices were at record levels.
In his view, those values were not sustainable and this had “definitely been reflected in the lack of sales and the lack of people willing to bring their properties to the market at the new values which have changed quite dramatically”.
Williams said it was not unheard of for quality gold orchards to sell for $1.8 million a canopy hectare or more during the peak. Now prices had slid back to $1.2m to $1.5m while quality green orchards had fallen from about $800,000 per canopy hectare to $400,000–$500,000.
“There is certainly demand for orchards as long as they are in the right price bracket.”
Williams had been in the industry 31 years and believed syndication orchard ownership would become more popular.
“For new investors, it is just the buy-in price and [syndication] makes it easy.
“It’s really a one-stop package because they are run by management companies who do it well.”
Zespri eyes $4.5 billion in sales
Zespri chief executive Dan Mathieson said after a tough growing season last year, it was “great to see per-hectare returns rebound on the back of much better on-orchard yields”.
The indicative forecast range for the 2024/25 season show per hectare, June’s Orchard-Gate Return for SunGold was $143,000 to $161,000; green $80,000 to $91,000 and red $69,000 to $76,000.
Mathieson said it reflected improved yields and the industry’s largest-ever crop of 197 million packed trays. The company was on track to deliver strong value to growers and reach its goal of $4.5 billion in global sales revenue this season.
“It’s an encouraging forecast, but there are still some challenges in this season’s smaller fruit profile and unfavourable foreign exchange movements from the Japanese Yen.”
17 kiwifruit orchards form syndicate
MyFarm chief executive Andrew Watters said it started buying gold kiwifruit orchards in 2018 and owns 13 in the Bay of Plenty and four in Kerikeri.
Those orchards collectively spanned 151ha valued at $190 million with another planned 10ha of growth.
Initially, the investments were structured into 11 syndicates (limited partnerships). However, to save on overheads and financing costs it has voted to amalgamate them.
Variable production results combined with adverse weather in 2022 and 2023 were other factors behind the decision.
“So some orchards will be up and others will be down and that affected returns of some of the investments. We started talking to those 560 investors, many of them Bay of Plenty based, about the merits of pulling all the assets together into one investment entity.”
“We could take out a lot of the variability, we can lower our cost base … we’ve got a very good crop this year.”
He said as values rose the tradition of family-owned farms and horticulture was giving way to “more corporate or distributed ownership”.
He said investing in kiwifruit was similar to other property in that, looking at the past six years or so, those who invested early in that period had “seen some nice capital gains”, delivering good cash earnings and distributions.
“We have had a couple of more difficult years, and asset prices have fallen somewhat, so that’s affected returns on the investments most recently established, but by pulling them all into a fund, we could take out a lot of the variability.”
Its investors were everyday Kiwis who did not have the means or interest to buy an orchard. Next month it would offer wholesale investors the opportunity to invest.
“For this fund, starting off probably modest with our initial year returns of 4.5% but we are targeting 7.5% cash returns and 10% total returns from the fund. And we’ve certainly done that in the past from all these investments.”
Most orchards were leased to post-harvest operators who provided orchard management services.
Carmen Hall is a news director for the Bay of Plenty Times and Rotorua Daily Post, covering business and general news. She has been a Voyager Media Awards winner and a journalist for 25 years.
