NZ could quadruple SunGold kiwifruit exports in 2013
While kiwifruit disease Psa-V has devastated the New Zealand kiwifruit industry this year, sales abroad have been strong with 'resilience' in Europe and good demand in Asia. At the Produce Marketing Association's (PMA) Fresh Summit event in California, www.freshfruitportal.com spoke with Lain Jager, CEO of marketer Zespri. The executive estimated a considerable uptick next year for Hort16A replacement variety G3, while discussing trials further afield, relations with Turners & Growers and improved quality from Chile.
While Zespri's gold kiwifruit shipments this year were better than expected at around 22 million trays, Jager still expects a significant drop for the segment in 2013, potentially down to 15 million trays.
He says the dominant gold variety Hort16A, marketed as Zespri Gold, was the most profitable product in recent years so to have it devastated by Psa has been very tough for growers.
"The orchard value drops so the equity level drops and the cash flow dries up - growers, almost without exception, have moved across to the G3, and now the challenge is really horticultural and technical," he says of the new variety, which is marketed as SunGold.
"G3 is not resistant to Psa, it's just more tolerant than what Hort16A is. There is risk there, we are seeing some failures, particularly with juvenile vines on G3 orchards, so it's just a matter of how many we can nurse through to become more resilient as more mature orchards.
"The learning curve for a new variety in my opinion takes about seven years. We've had two. So I’ve got another five before we really have a full understanding of it, but what we’ve seen so far this year we’ve taken great heart from."
Zespri shipped one million trays of the new variety this year, which Jager expects could rise to between 4-5 million trays in 2013.
"We did 2,000 replacement hectares of G3 just in the course of the last year. That's massive - bear in mind there are only 13,000 hectares of kiwifruit in New Zealand, and 10,000 hectares of that is green.
"That’s a really significant cost for New Zealand kiwifruit growers, but shows our determination to recover those volumes as soon as we can."
He says Zespri is paying growers more for taste in G3 than what it did for Hort16A , because the newcomer has a stronger acid make-up.
"That's just fine, and in fact it’s a fuller flavor as long as the sugars are high.
"We pay under what we call the Taste Zespri program, where we’re paying growers for producing high dry matter fruit, and of course dry matter translates into the sugars in the fruit.
"The G3 is like a new model car. There are some things that are really great about it; it doesn’t have the beak so you don’t have the damage, the production levels are very strong, when it's got high sugar levels it’s got a very full flavor and it stores better than the Hort16A."
He says if the fruit will not be suited for the Asian palate if it is not high sugar.
"We’ve seen it’s gone very well in Europe, small volumes in the States, Asia is fantastic, but any lower dry matter fruit we’re just not exporting, so we’re taking a very strong position on that with growers."
G3 options abroad
Jager says there are 150 hectares of G3 trial plantings in France and Italy, while Zespri is also looking for a supply location in the U.S. and maybe in China.
"We're not wanting to go too fast. Of course, we had the impact of Hort16A up there [France and Italy], so it's just 150 hectares and we’ll look at doing more in the next grafting window.
"Our partners are saying 'we want to be in the gold business, but we want horticultural confidence your new variety is going to work in our environment'."
He says Zespri is not looking for G3 production in Chile at this stage, due to the lessons learned from verticillium destroying Hort16A orchards in the country.
"That was disappointing for our grower partners, so we will take a really cautious approach.
"We are starting to see some golds coming out of Chile, and that gives us some confidence that perhaps gold can be grown there."
Changing Chilean dynamics
On the topic of Chile, Jager says the fellow Southern Hemisphere player has been behaving 'a little differently' than in the past, probably for the same reasons that New Zealand is feeling pressure such as exchange rates.
"We are seeing Chile focus quite hard on markets like Russia, we’re certainly seeing them work hard in markets like the Middle East, and South America too, also pushing into Asia.
"We're also seeing perhaps a little less pressure in Europe in particular with the volumes coming a bit later, some of the later market windows, really targeting storage.
"From our perspective what that means is a consistent phasing of fruit throughout the year, which we see as being positive for the market in general."
He said the Chilean Kiwifruit Committee's focus on quality was good for the whole category, while the country's re-entry into Korean supermarkets has not impacted sales.
"Obviously we've seen a lot more Chilean kiwifruit come into Korea this year, and actually from our perspective it’s gone just fine. Sales in Korea are largely unaffected - we'll see how that goes next year."
Jager offers his support on the issue of Chile dealing with Psa.
"We don’t see Psa as competitive. We have to be cooperative in sharing information, and we are largely disappointed that it’s in Chile."
Turners & Growers relationship
Jager emphasizes the relationship with New Zealand fruit company Turners & Growers is now very different to what it was in before, with its new management team, CEO and ownership under Germany company BayWa.
"The relationships at an operational level are fine, the communication is fine. What we are doing right now is having a very open dialogue with them saying ‘obviously, we’re waiting to see what happens with how G3 comes through, you’re waiting to see how your Enza Gold comes through in the Psa context.
"There’s no oversupply of gold currently, so we’re working together collegially to continue supplying customers around the world, keep business going and really just developing a technical understanding.
"The day-to-day relationships are just fine, but the strategic future remains unclear, and that’s just a consequence of what’s happening horticulturally at this stage; how G3 fares, how Enza Gold fares, obviously learning a lot about both products. The learning curve is really steep right now."
One relative positive to be taken out of the Psa experience is that green varieties have not been as susceptible to the disease as gold kiwifruit.
"I think around the world people are seeing the green be reasonably tolerant - that's not to say it hasn’t been affected, there has been some impact, but in general the vines are still alive, the volumes are coming through."
Zespri shipped around 70 million trays of green kiwifruit this year, along with 22 million trays of gold and three million trays of organic kiwifruit; the latter will be sold with fully compostable stickers starting in 2013.
"Last year we had a big crop, we sold a little later, and that attracted some comment, but this year we’ve had a smaller crop and sales rates have been quite strong.
"Chile seemed to come to the market a little bit later than perhaps what they usually do, so we had a great start and that just kept going - pricing has been a little bit stronger across the board, not much, but just a little bit.
"In terms of standouts, it's certainly fair to say that Europe has been very steady for us all year with consistently stronger sales on a week-by-week basis throughout the year; maybe a little bit surprising for us, particularly with the economic pressure in Europe."
He says Zespri sent a little bit less fruit into the United States, but that is more of a reflection of the strength of Asia, being less price sensitive.
"There's been strong demand in particular coming out of China, South East Asia, Taiwan and Korea are continuing to go very well for us, and Japan is very steady."