New Zealand: Kiwifruit earnings and jobs to double

The University of Waikato published a forecast -included in an ANZ Kiwifruit Insights paper- predicting major growth in the New Zealand kiwifruit sector. Last season this sector achieved record sales worth $2.26 billion, which Zespri aims to grow to $4.5 billion by 2025.

Northland kiwifruit earnings will more than double to $72 million and the number of jobs in the region's industry is expected to increase from 380 to 886 by 2030.

Kiwifruit has bounced back from the PSA crisis with a record 137.7 million trays produced in the 2016-17 season; 18% more than the previous year. Bay of Plenty has 86% of New Zealand's green kiwifruit orchards (Northland 1%) and 76% of the SunGold orchards (Northland 5%).

The ANZ paper says strong global demand for New Zealand kiwifruit has increased orchard valuations. Bay of Plenty valuations have in some cases doubled from 2010 pre-PSA levels, with green orchards now in the $300,000-$450,000/ha range and SunGold orchards in the $700,000-$1 million a hectare range.

According to an article by the New Zealand Herald, diminishing availability of land in Bay of Plenty creates opportunities for orchard development in Northland, Gisborne and Hawke's Bay. With its already established grower network, subtropical climate and wide diversity of soils, industry participants consider Northland an area with strong growth potential which would suit the SunGold variety.

Zespri is forecasting orchard gate returns of $57,000/ha for green and $112,000/ha for SunGold in the 2017-18 season. However, direct growing costs have increased over the past two years with average green and SunGold costs per canopy hectare at $32,000/ha and $37,000/ha respectively. The difference is driven primarily by wages.

The ANZ paper also looks at the large amount of capital required to develop a significantly higher level of kiwifruit production, assuming land suitable for SunGold would cost $125,000/ha and a SunGold licence cost of $250,000. "In addition we assume capital investment of $100,000/ha to develop orchard infrastructure and a further $100,000/ha to meet growing costs before the SunGold vines reach full maturity at four to five years," the ANZ paper says.

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