Bayleys news & articles

SunGold brings potential for green field orchard development.

Tags: Rural Rural Insight

In the wake of the devastating Psa disease that struck the kiwifruit sector in 2010, the Psa tolerant SunGold variety has proven to be an industry lifesaver outperforming expectations and helping turn the sector into an industry star performer.

Thanks to Zespri carefully managing supply against growing demand for the fruit, prices for SunGold have remained at a premium even as volumes have ramped up from less than 20 million trays three years ago, to almost 50 million this year.

The continuing strong demand growth has prompted Zespri to increase the licensed area it is offering to growers to plant more fruit. Initial plans had been to offer 400ha a year from 2015 through to 2022. But this has been ramped up significantly to 700ha a year starting in 2018, pushing the total new area committed to SunGold to 3,500ha by 2022.

“It is clear from performance in the markets in recent seasons and from our assessment of future demand that we need to accelerate supply growth of SunGold.

“It is clear from recent performance and assessment of future demand that we need to accelerate supply growth of SunGold.”

“The gap to fill between the strong demand outlook and our current trajectory of supply growth presents a significant strategic opportunity,” said Zespri chairman Peter McBride.

The SunGold fruit has proven to have a golden touch not only on consumers’ palates but also on orchard values.

Initial licenses were valued at only $7,000 a hectare, then the formal 400ha a year licensing process had that value jump to $170,000 a hectare, with last year’s 400ha touching $235,000 a hectare.

With supply of existing orchards tight, orchard sales of up to almost $1.0 million a hectare have been reported and some have sold within only days of being listed.

Te Puke based Bayleys rural agent and orchard specialist Snow Williams said orchards continued to sell quickly. He says he is constantly being asked about land that would have the potential to convert into SunGold kiwifruit to take up the additional area being allocated under the licensing process.

“Right now, we could find buyers easily for blocks of land suitable for kiwifruit plantings, but the challenge is actually getting listings of that land, it is proving quite difficult to find.”

While supply was tight, he said the SunGold variety was proving to be particularly robust, heavy cropping and suitable for growing beyond the traditional Te Puke- Western Bay of Plenty growing zone.

“We have sold quite a bit of land down Opotiki way that is very suitable for SunGold kiwifruit planting. Down that way the dry matter levels in the fruit seem more assured, and there are some beautiful tracts of land through there that suit the crop.”

For smaller block holders the flexibility of orchard management and location could make conversion to kiwifruit an appealing option. With its strong economy the greater Bay of Plenty provides multiple opportunities for off-orchard income to supplement an orchard in its early stages of development.

The BoP economy claimed the biggest GDP growth to March 2016 of 7.7% against a national average of 3%, and growth is continuing strongly through 2017.

Meantime a well-established orchard management support sector also means block owners converting to kiwifruit can tap into a base of highly experienced management skills if they lack the skills or time to run a new orchard themselves.

While larger corporate type orchardists were seeking larger (10ha-plus) tracts of land, there was also green fields orchard opportunities for existing pastoral farmers wanting to add another income stream, and additional capital value, to their properties.

“There are green fields orchard opportunities for existing pastoral farmers wanting to add another income stream, and additional capital value, to their properties.”

“We could easily move a drystock or dairy property that had land suitable for kiwifruit plantings upon them, these sort of properties are highly desirable,” says Snow.

He said demand for quality horticultural land in the region was also buoyed by crops other than kiwifruit. Avocadoes were also enjoying a surge in interest on the back of promising market returns and expansion into China.

Zespri has confirmed green field conversions for SunGold is likely to form a big part for the next four years’ of license issues. Over the past two years of the 800ha planted in SunGold, 500ha was cut over and grafted onto Green orchards with the remainder being green fields developments.

However the kiwifruit marketer is also acutely aware of the value of the long standing Green variety, and did not want to lose much more Green crop cut over to SunGold.

“It is good to know Zespri are aware of Green’s value. It is a longstanding crop that has served the industry well, and we are going to be having to look at where other land lies that is suitable for SunGold,” says Snow.

Download PDF   

Related articles