After facing challenges due to cost pressures and adverse weather conditions, the New Zealand kiwifruit sector is observing an improvement in both orchard returns and values. A report by Colliers on the New Zealand kiwifruit market has analyzed the sector's profitability and future direction, highlighting a recent drop in orchard sales activity over the past two years. Chris Boyd, Colliers' director of rural and agribusiness valuation, noted a decrease in orchard sale prices in late 2022 and early 2023 compared to previous peak prices, with a significant SunGold kiwifruit orchard sale recorded at $1.2 million per canopy hectare in October last year.
Sales volumes have also decreased, with approximately 25 sales reported last year, a drop from about 70 in 2021. Boyd mentioned that the orchards sold recently were generally smaller, mixed properties with lifestyle attributes, indicating a market shift. A disparity in value expectations between vendors and buyers has contributed to lower sales volumes, with buyers offering prices below vendors' expectations. Despite these challenges, the sector is seeing signs of optimism, with better crop yields and more normal climatic conditions anticipated. The 2023 harvest, though the lowest since 2017, marked a turning point with an estimated 185 million trays expected this year.
Orchard profitability is also on the rise, with orchard gate returns for Green and SunGold varieties showing improvement from the previous year, though still below the peak levels of 2020. The report also addresses challenges such as unlicensed SunGold plantings in China and the potential ban of Hi-Cane, a spray critical for uniform bud break, which poses a risk to orchard yields and profitability. The report suggests that entering ownership through an established orchard is a more prudent approach for potential purchasers, considering the high entry and establishment costs for greenfield orchard conversions.
Source: farmersweekly.co.nz
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