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Rural Insight: Apples add value into hort sector

Tags: Rural Rural Insight

The New Zealand apple industry is scooping global accolades for its performance and quality, with little sign of the sector’s current boom likely to fade any time soon.

After being ranked in the World Apple Report as the world’s most competitive performing country for apple production, the industry has also set its sights on topping the one billion dollar mark for exports by 2022.

This comes as the sector reported its highest harvest on record for the 2015 season, yielding 550,000t, up 13% on the year before and likely to surge further with plantings of more trees over the present season.

The renewed optimism in the sector comes after the dark days of the 1990s when orchardists were chopping trees out and converting land into housing and lifestyle blocks.

Bayleys New Zealand country manager Simon Anderson said the optimism was supported with evidence of a surge in buyer interest in good quality apple orchards that had potential for further expansion.

“The renewed optimism in the sector is supported with evidence of a surge in buyer interest in good quality apple orchards with potential for further expansion.”

Bayleys Havelock North rural agent Kris August said the Hawke’s Bay region was evolving into a two tier market for apple orchards.

“We have people who are interested in buying something that is essentially a lifestyle block that has a house and apples on it, and then we have very strong interest in orchard land blocks that don’t have dwellings upon them for purely commercial production.”

People purchasing smaller lifestyle type blocks were finding the opportunity to lease the apple orchard back to the large orcharding companies such as Bostock and Mr Apple.

“It does depend however on that orchard block having the right varieties on it. If not they will want to rip out the trees there, and plant more marketable varieties.”

But owners could expect a good level of return from their lifestyle investment, with companies paying about $5000-$5500 a hectare as standard lease rates.

“It really stacks up for anyone who does not want to grow apples themselves, and would like a return off their land.”

Meantime bare land blocks already planted were proving to be in tight supply through the region, with orchard investors paying about $150,000 a hectare for blocks with trees already on them.

The premium apple growing land was still around the Twyford district and the better soils of the Heretaunga Plains.

“Water supply is critical, and blocks that have good bore supply with good consents for take will always be in strong demand.”

Nationally the Hawke’s Bay remains the major apple growing region, accounting for two thirds of the national crop, with a quarter coming out of Nelson and 7% spread between Otago, Canterbury, Wairarapa, Waikato and Gisborne.

Pipfruit New Zealand chief executive Alan Pollard said all growing regions were experiencing increased industry investment with prospects of a million more new apple trees being planted across the country amidst soaring international demand for our apples.

The peak industry body expects planted area to increase by about 1700 hectares by 2020, with most of the growth focussed in the Hawkes Bay.

He said a shared industry vision, and strategy for achieving that vision was a big part of why it has become a serious international player in the lucrative global fresh fruit industry.

“Through new exclusive varieties, world leading on-orchard practices focussed on producing the freshest, tastiest and safest fruit, New Zealand developed world leading post-harvest technology and sophisticated international marketing, the New Zealand apple has moved over the years from being a commodity to a high value niche premium product”.    

The investment in one million trees represented an additional $15 million of spend on trees alone. They typically form a third of the cost of orchard development excluding land.

Pollard said demand was broad across all apple varieties, but there was real excitement around opportunities emerging from Asia for sweet red apples including Pacific QueenTM , RoseTM and BeautyTM, and EnvyTM, along with sustained demand in the United States and Europe for Braeburn, JazzTM, and Pink Lady.

The growth opportunities from expansion were already filtering through the industry’s support sector, with Waimea Nurseries in Nelson reporting a three year back order on some root stock at this year’s Horticulture NZ conference.

With a $700 million export harvest this season the $1.0 billion target sits tantalisingly close and Pollard said the sector was now ahead of realising that goal by 2022.

“In 2012 the government set a target of doubling exports by 2025. The New Zealand apple industry has achieved that in just four years”.

“The New Zealand apple industry has already achieved its 2012 target of doubling exports by 2025.”

The international ranking for competitiveness was based on an assessment of all steps in the industry’s supply chain, from orchard management systems to infrastructure and financial-market factors.

New Zealand came in the top five for all categories, and took out first place ahead of Chile and the United States.

Simon Anderson of Bayleys said apples represented the diversity and value that was evolving in New Zealand’s horticultural sector, and with that came some exciting opportunities for corporate and private investors alike.

“If it is a case of an export industry identifying consumer tastes, developing products to meet that and market in an exciting, innovative way, then the apple sector has ticked all the boxes.”

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