The first of these is what the report has termed the Status Quo. This is based on Zespri's assessment of the growth of the industry, with five years added to ensure conservatism as the original analysis was considered, by some, to be overly optimistic. In this model the total production will grow by 48%, including a 150% rise in cultivation of gold and other new kiwi varieties, that are expected to fetch higher prices. The initial Zespri model that this is based on was designed to show Zespri's plans to reach their export revenue target of three billion dollars.
The second scenario has been termed as Assisted Recovery. This model is based upon industrial prediction of recovery if bank lending is not restricted by criteria relating to debt:equity ratios. Under this scenario growers, particularly in the Te Puke area, will quickly remove Hort16A vines and switch to the new G3 variety. Te Puke is expected to replace Hort16A immediately following the 2012 harvest, whilst other regions will follow within 4 years time.
The third and final scenario is the most pessimistic, in which a proportion (57%) of growers are unable to initially take advantage of the availability of G3 licences, as they are unable to secure the appropriate finances. As a result the recovery rate from infection is significantly depressed.
Of course, PSA has had an impact in all areas of the industry and an important aspect of this is the export trade. The report looks forward at the sector's export potential for recovery, based upon each of the three models, as seen in the chart below.
Expected export kiwifruit yields by variety 2011 to 2021 (HW=Hayward, NV= New varieties)
Under the SQ model the report predicts that export yields will increase by 29% to 144 million trays by 2021. Under AR this is more modestly predicted at just 15%, whilst under the UR, export is anticipated to have grown by just 7% over the same period.
Under the three scenarios the volume of exports is not the only thing to differ; there are also significant difference in the types of kiwifruit exported. For example, under SQ, the prediction was for rising production and therefore, export, of high value varieties over ten years starting 2011. Hayward is expected to decline as a proportion of export sales from 73% to 37%. Under AR the proportion of Hayward exported still contracts, but not as dramatically, to 41%. Under the UR model, with much slower take up of new varieties, Hayward export declines only to 57% of total exports.
Of course what this means is that the different export scenarios envisaged by the different model, represent differencing levels of financial return.
The report goes so far as to predict the annual export returns over the period of analysis, according to each of the models.
Expected export kiwifruit returns by variety 2011 to 2021
The difference represented by the varying models suggest higher returns, in the medium term, under the SQ model than in the other two possibilities, with AR generating more income than UR. The values presented by the recovery models do not reach the SQ levels by 2021. In the case of AR the gold and new varieties reach SQ levels around 2032, whilst the same is achieved by the UR model only as late as 2036.
The differences in export returns between the AR and UR scenarios
As the graph shows the differences between the different projections peak around the year 2024. By that point the first fruit from G3 vines planted and grafted after the 2012 season will be harvested. However, as a lower amount of G3 will have been planted in the UR scenario, between 2018 and 2019, UR generates a higher rate of export returns as more land is still under production (with Hayward) than in the other models, which anticipate still being in wait for the new varieties to come online.
As the report makes clear, there is everything to play for in ensuring the recovery is as smooth as possible. the effects of the disease, not just upon the industry, but on the communities as a whole is substantial and far reaching. A steady recovery, with growing amounts of export trade, will have an impact on a wide range of businesses, employment levels and the national economy as a whole.