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Farmers urged to consider partial greenfields orchard options.

Tags: Rural Rural Insight

Growing confidence in the kiwifruit sector is providing new opportunities for pastoral farmers to tap into, giving them the opportunity to be part of the horticultural success story without necessarily having to sell their entire farm to do it.

The latest Ministry for Primary Industries (MPI) Situation and Outlook report paints a highly positive picture for the primary sector overall, with horticulture standing out as an emerging force for 2019.

Horticultural exports are forecast to rise by 13%, topping $6 billion and the boost is largely coming from improved apple and kiwifruit values and yields for the season.

Last season’s kiwifruit production was 25% up on the poor yields of the year before. Coupled to the conversion to greater areas of high value SunGold kiwifruit, some orchardists are experiencing 90% higher orchard gate returns compared to Green varieties.

For farmers in parts of the upper and central North Island the improvement in returns can offer a double barrelled opportunity to have a foot in both the horticultural and pastoral sector, spreading their risk, optimising their property’s return and even helping inject some additional capital value into it.

ANZ’s report on kiwifruit industry investment released late last year highlighted the broadening opportunities beyond traditional kiwifruit growing areas, including parts of Northland for the SunGold variety.

University of Waikato has estimated kiwifruit earnings in that region will more than double to $72 million by 2030, as will the number of people working in the sector.

The ability of SunGold to grow well outside of its traditional areas in Bay of Plenty is also opening up opportunities for larger iwi land holders in more remote Eastern Bay of Plenty districts.

Bayleys Te Puke rural real estate agent Snow Williams says he has a database bulging with buyers interested in kiwifruit orchards in the BoP, and his greatest challenge is finding orchard opportunities for each of those buyers.

“It is fair to say supply is quite tight – any growers who have orchards and are successful are not really in a mind to sell at this point, whilst many are also keen to expand, and then there are those seeking entry into the orchard market.

“It’s keeping competition quite hot for good properties.”

He maintains there is an opportunity for farmers in areas suitable for Green and SunGold kiwifruit to consider looking over the fence at their horticultural options, to consider the economics of putting some land into kiwifruit vines.

“I know you do see from time to time shelter belts on pastoral properties where someone has done it some years ago and maybe it has not gone so well - and pastoral farmers can have long memories about these things.”

But the kiwifruit industry has matured considerably from the “boom-bust” days of the 80s that very nearly ended it, and options do exist around subdivision, ownership and leasing that may be worth considering.

Snow has one client who has recently split 40 hectares off their pastoral property for kiwifruit.

“But we are not seeing as many as you may think, and pastoral farmers do tend to stick to what they do, but it is not beyond the bounds to look at options.”

Snow believes looking at some kiwifruit options could provide a useful life-stage choice for older farmers on smaller farms in suitable areas.

“You could be on a 60-70ha unit and approaching retirement, but possibly not wanting to leave the farm. You could put a reasonable portion of it into kiwifruit, even lease it out for the income, and keep some of the area for dry stock grazing. Frankly, as farmers age, I think we could expect to see more of this happen.”

The nature of kiwifruit management is such that it can integrate well into a pastoral farming calendar, with the busy picking season coming as pastoral focus tapers off into autumn, while winter pruning comes when things are quieter on farm.

“It is a case of you being able to do as much, or as little, as you may choose given the management options and skills that are out there.”

The ANZ kiwifruit investment report cautioned any greenfields development needed to be appropriately capitalised or have another source of income to support outgoing cashflows for the first few years.

“And having your well established pastoral operation there already doing that can help make a significant difference to the economics of considering your conversion options,” says Snow.

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