New Zealand horticultural investment company, Hortinvest Limited has released a $15.5 million cherry orchard project at Central Otago to savvy investors seeking a slice of the premium cherry pie.
The 80-hectare Lindis River project near Cromwell is double that of Hortinvest's first cherry orchard and significantly bigger than most currently planted in the region. It is projected to send between 18-20 tonnes per hectare to market in the lucrative cherry season when it reaches full mature production by 2025/2026.
Hortinvest project and orchard development manager, Ross Kirk, said the project would focus exclusively on cherries and encompass 53,000 trees, with a spread of proven varieties to lengthen the harvest period and capture the fast-moving Chinese New Year market globally and Christmas market domestically.
The project is Hortinvest's second cherry development since the company was founded in 2016 by seasoned horticulturalists Ross and Sharon Kirk in response to an unprecedented global demand for premium New Zealand cherries.
New Zealand exported more than 4,000 tonnes of cherries to key markets in Asia, Europe, the United States and the Middle East in the 2017/2018 season with Central Otago accounting for some 90 per cent.
"Hortinvest's point of difference is that as a fully integrated company, we source the land, purchase machinery, develop and manage the orchard, then pack, export and market our own fruit, using state-of-the-art orchard and packhouse systems," Mr Kirk said.
"There are no third parties clipping the ticket along the supply chain because we have the experience and skills ourselves to manage an orchard project from set-up to market.
"Therefore, all returns from the market go back to the orchard owners. For investors, this means the total cost of producing and marketing fruit is significantly lower than other horticulture investment models."
Mr Kirk said Hortinvest projected an internal rate of return (IRR) of 25 per cent over the 10 year project.
Lindis River would deliver leading-edge orchard management practices including a single leader growing system to maximise yield, he said.
"The single leader system, in which trees grow naturally upwards into an apex, with central branches trained outwards, requires less trees per hectare yet achieves a better yield. Picking is more efficient and fruit quality is superior because the cherries are less exposed to the elements," he said.
The Lindis River project is one of two 80-hectare Hortinvest opportunities currently seeking investors in the Central Otago region, he said.
"Hortinvest has secured the land by collaborating with sheep and beef producers who are seeking to diversify their businesses and have recognised the potential in horticulture," Mr Kirk said.
With seasonal labour a significant issue for New Zealand's fresh produce industry, Hortinvest was also working on long-term plans to develop temporary on-site accommodation for up to 500 pickers at its developments, he said.
Site provides growing advantages
The natural elevation of the Lindis River project - up to 400 metres above sea level - meant the area was less prone to damaging frosts in the critical spring blossoming and fruit-set period between September and November, Mr Kirk said.
"There are various ways to fight frosts. Our preference for this region is to use windmills which pull warm air down and stop buds and flowers freezing. We have budgeted for up to eight windmills for this project."
"Lindis River is also set on gently sloping ground with access to a good local water scheme and proximity to arterial trucking routes." Mr Kirk said now that due diligence and extensive operational and capital budgeting for Lindis River was complete, the project Information Memorandum (IM) was available for prospective investors.