Satisfactory 2010/11 Result but Psa Challenges Ahead

MEDIA RELEASE 17 August 2011

Satisfactory 2010/11 Result but Psa Challenges Ahead

ZESPRI's 2011 Annual Meeting delivered a realistic outlook of the impact of the vine-killing disease Psa on the kiwifruit industry, with a recap of the 2010/11 season, which delivered satisfactory returns for growers despite ongoing currency volatility and global economic instability.

Over 300 shareholders attended ZESPRI's Annual Meeting, held in Tauranga today. This was the first Annual Meeting since the confirmation of Pseudomonas syringae pv. actinidiae (Psa) in New Zealand last November.

Reflecting on the 2010/11 season, ZESPRI Chairman John Loughlin said returns to growers were satisfactory in the face of a challenging global economic environment.

Total returns to growers in 2010/11 improved from $849.0 million to $883.3 million compared to 2009/10, an increase of four percent. A pleasing result was average per tray Orchard Gate Returns to ZESPRI(r) GREEN growers were $4.21 a tray, meaning on a per hectare basis the return to GREEN growers increased nine percent to $32,234 last season.

Mr Loughlin said in 2010/11 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.

Mr Loughlin said the global economic environment in 2011/12 was not going to be any more favourable for the industry.

"The united structure of the New Zealand kiwifruit industry is again going to be the cornerstone of supporting returns to growers this season in such uncertain times," Mr Loughlin said.

Growers were informed of the first forecast returns for the 2011/12 season. All categories were forecast to be down on a per tray basis compared to last year. However, much higher productivity meant growers would still be getting per hectare returns similar to those received in 2010/11.

ZESPRI CEO Lain Jager outlined how ZESPRI was reprioritising work and resources to prepare for the impact of Psa.

"The fact is we still do not know how Psa will impact on our business, but there is clear downside potential. It continues to spread, and the disease may well have a significant impact on production in coming seasons.

"We have dramatically re-prioritised resources and directed them into a significant global Psa research and development programme," Mr Jager said.

Mr Loughlin said in re-prioritising resources, ZESPRI had to strike a balance between decisive urgency to ensure that it has a future, whilst ensuring that urgent actions do not compromise that future.

"We are confident that a long-term viable solution will be found to Psa in the next two to four years.

"Once the solution is found, ZESPRI needs to be in the position to rebound quickly, because there remains huge opportunity for the industry to meet its long-term goal of growing exports to $3 billion by around 2025," Mr Loughlin said.

Mr Loughlin said in the meantime ZESPRI needed to do all it could as part of the wider industry effort to slow the spread of the virulent Psa-V, and support those growers who had lost part, or all of their orchards.

Outcomes of the meeting included:

* Three Directors - Craig Greenlees, David Pilkington and Ray Sharp - retired by normal rotation. All three sought re-election. David Pilkington and Ray Sharp were both re-elected uncontested and grower shareholders voted Craig Greenlees into the vacant director spot.

* There was very strong shareholder support (98.3% support) for ZESPRI to provide support and services to Kiwifruit Vine Health, including without limitation the management and conduct of a Psa-related research and development programme.

August 2011 Forecast - Fruit and Service Payments*

POOLS (FRUIT CATEGORIES)

2010/11 FINAL

AUGUST 2011 FORECAST

VARIANCE BETWEEN 2010/11 AND AUGUST 2011 FORECAST

Total fruit and service payments (across all pools)

$858.9 million

$922.3 million

+$63.4m

$8.44 per tray

$8.18 per tray

-$0.26

ZESPRI(r) GREEN

$7.31 per tray

$6.96 per tray

-$0.35

ZESPRI(r) GREEN ORGANIC

$9.08 per tray

$8.67 per tray

-$0.41

ZESPRI(r) GOLD

$12.65 per tray

$11.59 per tray

-$1.06

*FRUIT AND SERVICE PAYMENTS The average amount paid by ZESPRI to supply entities for a grower's fruit - excluding the loyalty premium

ENDS

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