2010 kiwifruit season lifts returns to growers

MEDIA RELEASE 24 May 2011

2010 kiwifruit season lifts returns to growers

A strong 2010 kiwifruit season has lifted total payments to growers above season forecasts, with a particular highlight being a significant boost in returns to GREEN kiwifruit growers over the 2009 season, ZESPRI's 2010/11 financial results show.

Total returns to growers in 2010/11 improved from $849.0 million to $883.3 million compared to the prior year, an increase of four percent, with average Orchard Gate Returns to ZESPRI GREEN growers increasing nine percent to $32,234.

Net global kiwifruit sales increased one percent to $1.511 billion in 2010/11, despite the global volume of ZESPRI(r) Kiwifruit sold falling one percent in the same period.

ZESPRI's Chairman John Loughlin said the results were particularly pleasing when considering the challenges facing kiwifruit growers.

"A stuttering global economic recovery, rising oil prices, seasonal challenges in New Zealand, the impact of Psa on ZESPRI's orchards in Italy and the confirmation of Psa in New Zealand, meant a tough environment in 2010/11," Mr Loughlin said.

"Against this backdrop, delivering increased total returns to growers is a testament to the New Zealand kiwifruit industry's ability to keep innovating and keep delivering.

"The increased return to green kiwifruit growers was a highlight because average orchard yields were down by four percent, freight costs due to rising oil prices were up five percent and the New Zealand dollar strengthened through the year.

"The industry is benefiting from strong growth in Asian markets, which delivers both a positive market mix effect and supports pricing across all markets as demand generally outstrips supply."

Mr Loughlin said ZESPRI's net profit had fallen significantly, from $25.9 million to $7.3 million. The fall was primarily due to contributing $12.9 million to the response to Psa in New Zealand, and increasing the loyalty payment to growers from 15 cents per tray to 25 cents per tray.

The Board has announced an intention to declare a final dividend of four cents per share to be paid in August 2011.

The early signs for the 2011/12 selling season are for another challenging year in the face of further increases in oil prices and a strong New Zealand dollar. Increased volumes of GREEN ORGANIC (increase of 9 percent) and GOLD (increase of 28 percent) will put pressure on average market returns as more fruit will go into lower returning markets than in previous years.

Indicative returns are therefore expected to be slightly lower than 2010/11.

Table of indicative returns

Pools (Fruit Categories)

2011/12 Indicative Returns

2010/11 Final Returns

Excluding Loyalty Premium

Excluding Loyalty Premium

ZESPRI(r) GREEN

$6.80 to $7.40

$7.31

ZESPRI(r) GREEN ORGANIC

$8.30 to $8.90

$9.08

ZESPRI(r) GOLD

$11.60 to $12.20

$12.65

Mr Loughlin said beyond the 2011 season the future of the kiwifruit industry in the short to medium term was uncertain, with the impact of Psa yet to be determined.

"ZESPRI, like the wider kiwifruit industry, is focused on Psa and is leading a significant research and development programme into all aspects of the vine disease," Mr Loughlin said.

This financial year ZESPRI will contribute around $2.6 million toward an almost $3.5 million multi-agency investment programme in Psa research and development.

"We have a tough 24 to 48 months ahead of us as we learn how to live with and manage Psa. However, I'm confident the industry will overcome Psa and meet its long-term growth plan to triple export earnings from $1 billion today, to $3 billion by 2025," Mr Loughlin said.

Table of financial highlights

Financial highlights

2010/11

2009/10

Variance

New Zealand-grown Fruit and Service Payments (including loyalty premium)1

$883.3 million

$849.0 million

+4%

- Per tray supplied

$8.68

$8.32

+4%

Net profit after tax

$7.3 million

$25.9 million

-72%

Average New Zealand-grown Orchard Gate Return (OGR) per hectare

$41,830

$39,142

+7%

- GREEN

$32,234

$29,561

+9%

- GREEN ORGANIC

$37,541

$39,403

-5%

- GOLD

$83,785

$83,094

+1%

Global kiwifruit sales

$1.511 billion

$1.501 billion

+1%

Global volume (trays sold)

106.8 million

108.3 million

-1%

New Zealand-grown

98.1 million

98.5 million

-0%

- GREEN

69.9 million

71.9 million

-3%

- GREEN ORGANIC

3.3 million

3.3 million

-

- GOLD

21.1 million

22.0 million

-4%

- OTHER

3.8 million

1.3 million

+192%

Non-New Zealand-grown

8.7 million

9.8 million

-11%

- GREEN

4.7 million

4.9 million

-4%

- GOLD

4.0 million

4.9 million

-18%

[1] Total Fruit and Service Payments are all payments made by ZESPRI to the New Zealand Kiwifruit industry for the supply of kiwifruit.

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