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Seeka innovates to offset lower volumesThe New Zealand kiwifruit season has been challenging for the growers this year with rain during harvest and difficulties in getter the right dry matter levels and an overall reduction in yields.
Despite this Michael Franks CEO of Seeka is happy with how the kiwifruit season went.
"Overall we are pretty happy. We are fully loaded out of SunGold and the fruit loss is outstanding at just 0.73%. We have about 1.5m trays of Hayward to go and our fruit loss is at 0.38% to the end of week 37 - we expect to be under 1m trays in a few weeks. Likewise we have had a great run with our Hayward organic fruit. The fruit loss is 0.21% and we are all but done."
"So given the rain interrupted harvest, lower dry matter fruit and the general softness of some lines of fruit at harvest time – really the fruit loss is extraordinarily low across all varieties."
Overall in New Zealand Hayward yields were down. Seeka’s Hayward orchards delivered on average 30% lower yields at a total volume of 15m trays. But the average orchard gate price per hectare will remain around $54k per hectare, similar to last year. SunGold's returns per hectare continue to be strong however at around $105k, according to Franks.
"Our avocado season has just commenced with the packing of fruit from our growers in the far north. The early fruit is tremendous quality and while the yields are a up, actually the total volume from New Zealand is expected to be down by 50% reflecting the biennial bearing phenomenon in the Bay of Plenty crop. Early pricing in Australia is very strong and in addition there is good demand for New Zealand fruit across Asia."
Seeka has deliberately delayed its Bay of Plenty harvest to ensure it meets the Australian retail commitments in the New Year. The company has delivered its growers market leading returns in each of the last 4 years. This year Seeka expects to handle and sell between 250k and 300k trays of export avocados compared to 450k in 2016/17.
All of Seekas's avocados are sold under the Seeka brand, the fruit traditionally goes mostly to the Australian market with just 10% to Japan. This season the company will also be sending avocados to Korea for the first time.
"We contacted our key customers in Australia early on to give them our estimated volumes, worked out the size profiles that they would want and agreed a program. We then determine what markets the remaining sizes should go to. You can't turn markets on and off, and some markets are loyal to you in good and bad years, so you have to find a way to compromise everything equally so it works for everybody," explains Franks.
The Australia customers like mid-large sized fruit while the Asian markets like mid-small sized fruit.
The Australian market is one of the highest paying markets in the world, but the Asian markets are starting recognise this fruit and paying more for this premium fruit.
Seeka have the exclusive rights to grow the new Gem variety of avocado in New Zealand. The first harvest is still 2-3 years away says Franks, "We will have will have 50ha in the ground end of next year. The Australian avocado production has a gap around January-February, this is why we have invested in the Gem avocado as it is a later maturing variety and will hit that Australian window."
Seeka has also created a new business unit called the Delicious Nutritious Food Company – this business has a number of business components and includes the manufacture, marketing and distribution of the Kiwicrush range of products. These products are based on a highly valued functional food from processed kiwifruit and sold extensively into hospitals and retail throughout New Zealand.
"Seeka bought the product in August 2016 and it was manufactured for us under licence. When that arrangement came to an end we filled the orders ourselves and since April this year we have commissioned our own manufacturing plant and are now producing our own product."
Franks said he was delighted with the new business unit, "It has exceeded my expectations. We have gone from nothing to a fully operating food processing business delivering a nutritional kiwifruit product helping sick people undergoing harsh chemical treatments or recovering from operations. The product not only is fantastic but also delivers our growers a premium."
The company also manufactures, bottles and in conjunction with John Bostock, markets high end avocado oil into key Asian markets. And rounding out this new business is a punnet packing facility targeted at kiwiberry and blue berries.
Seeka has reported strong earnings from its Australian business. In the 6 months ended June 30 2017 Seeka reported EBITDA of $3.4m compared to 1.5m for the same period in 2016. Pleasingly Seeka Australia lifted its kiwifruit production from 2000 tonnes to 3000 to 2991 tonnes in 2017 and lifted its export programs to Europe and Asia.
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