New Zealand apple exports to exceed NZ$700M in 2016
"I keep saying to people that we're doing really well now,Ā and they shouldnāt be surprised - this is the end result of a number of years of very good decision-making, good investment and itās all coming to fruition now."
These comments from Pipfruit New Zealand CEO Alan PollardĀ were made during Fruit Logistica in Berlin,Ā just moments before his compatriots at Turners & Growers officially announced the opening of a Bangkok office, where in addition to kiwifruit sales with Zespri the company would also be marketing apples in Southeast Asia.
In conversation with www.freshfruitportal.com, Pollard and the group'sĀ business development manager Gary Jones discussed how the country's apple sector had witnessed higher productivity than expected this year with new plantings coming into production.
"It'sĀ going to be about 5.5% up for export volumes on last year, which is about 10% up on what we anticipated a few months ago," Pollard said.
"Something like aĀ million trees that went in last year and itāll be the same again this year going in, which are going toĀ come into production in three to four yearsā time.
"In terms of industry value now, last year we had NZ$630-640 million (US$419-425 million) so this year weāre anticipating we'll probably exceed NZ$700 million (US$465 million) ā thatās over a 100% increase on four yearsā ago. The growth trajectory is exponential and in our view itās sustainable growth as well."
Jones added what made this uptickĀ even more significant was the fact this was supposed to be an 'off year', given theĀ alternate bearing nature of apple trees.
"Itās the first time since 2008 that weāve had an upswing in what is supposed to be an off year, which means next year is going to be a massive crop," Jones said.
When asked how the organization could be so bullish on high prices despite such a large volume rise, Jones pointed to the importance of proprietary varieties and high demand in Asia.
"The price point for any unit of measure is about 50% higher now than it was four years ago. It's driven a bit onĀ volume but itās mainly driven on price, which is a clear indicator that demand has gotten away from supply for New Zealand apples," he said.
"There are a lot of proprietary varieties which have a significant proportion of the crop now andĀ are commanding some pretty big premiums, particularly in Asia.
"The growersĀ are returning very good moneyĀ and that allows them to reinvest in their business, planting more varieties which are proprietary, focusing on specific markets and customs," he said, adding a depreciated New Zealand dollar had also played in the sector's favor.
Pollard shared figures that showed just how much the sector's focus had shifted from Western to Eastern markets.
"Last yearĀ over 40% of our export volume went to Asia, up from 33% the year before so itās a noticeable shift," he said.
"Asia still has growing economies, notwithstanding the concerns around China which we donāt believe will impact demand for us, and youāve got the shift from low to middle class - they've got high disposable income.
"TheyĀ want really high quality, fresh and safe fruit, and weāve just hit the sweet spot."
Concerns about economic deceleration in China have caused concern for many agricultural exporters around the world, but neither Pollard or Jones appeared to pay too much mind to the issue, citing internal market aspects that don't necessarily show up in GDP figures.
"There are two economies in China ā thereās a move to a service-based economy where all the growth is and will continue to be, and then you've obviously got the rust belt, the production andĀ commodity sectors which are falling away," Jones said.
"You've got the service sectors which are in the cities and have the customers weāre targeting, where if anything theyāre growing much quicker.
"We donāt see any slow-off in demand; in fact itās likely to continue to grow significantly."
Pollard saidĀ New Zealand's apple sector was targeting a very specific "high niche premium market".
"That'sĀ where thereās very strong demand outstripping supply, where our varieties are very well targeted and thatās where the price points are very strong. We just donāt see that changing," he said.
"Everyone is desperate for a bad story about China, and I just think theyāre manufacturing, struggling and scrambling to try and find negativity. So there are just good opportunities there because there is very good fundamental growth where our customer base is,"Ā Jones added.
Pollard emphasized New Zealand was still a small player with just 0.5% of the world's apple production, but there was still room for growth and breaking in new markets - Australia, India, Japan and South Korea are the prime examples.
"IfĀ we can crack those markets and find ways to get in over the next four to five years, that will set us up for another round of growth," Pollard said.
"There are a number of rounds of negotiations going on for other agreements which potentially could create an opportunity for us, so weāre certainly working towards phytosanitary access and what we need to do in the event that we do get trade access.
"In terms of tariff reduction, Japan is the key market for us that offers that opportunity, because in a number of other markets we donāt have tariffs going into them, butĀ there are some of the other aspects like standardization of phytosanitary rules which potentially has some benefit for us."
JonesĀ saidĀ cutting apple tariffs had been left off the table in the New Zealand-South Korea free trade agreement, but clarified Australia was in the same boat in its deal with the East Asian country.