Rural Insight -
Whilst maturing production and sound Orchard Gate Returns (OGR) have built confidence in the market in recent years, fruit quality and pack out yields have presented challenges in the last two seasons for growers. Lower comparative OGR and cost inflation have also reduced returns.
Buyers are becoming more considered in relation to environmental factors. Primary focus is on CapEx requirements, use of sprays and orchard layout to future proof climatic events such as hail, frost, and wet feet (flooding of roots)
Those with long term water access are the winners. Managing expiring consents and the “use it or lose it” approach by regional councils is often critical to preserving production and value of orchard land.
Sector growth in recent years has seen orchard development of land in locations that would have traditionally been less desirable. Buyers are expected to place a greater emphasis on the quality of the development, infrastructure, and orchard location – opting for orchards that have greater resilience or ability to mitigate climatic events going forward.
Capacity across the whole supply chain will continue to be tested. Right from access to labour, packhouse throughput capacity, chilled storage and logistics. The ability for the sector to accommodate the increase in production coming on stream (for kiwifruit specifically) will be an important factor to maintain sector confidence.
Control of labour costs are expected to remain a core area of focus in the absence of an increase in labour supply. Growth in the labour pool, such as an increase in the RSE scheme could provide some relief for growers.