Situation and outlook for New Zealand agriculture and forestry (August 2007)

Situation and outlook for primary industries

7 Kiwifruit

Exports
Production

Prices for New Zealand’s kiwifruit remained stable in international currencies in the year ended 31 March 2007, and we forecast continuing stable prices through to the end of March 2008, despite downward pressure from increased supplies of fruit in the market.

World production of kiwifruit is expected to rise over the forecast period. The consumption of kiwifruit is still increasing, despite static or falling consumption of most fruit types in developed markets. Prices for New Zealand kiwifruit are expected to remain reasonably stable due to high quality standards, a good reputation, and good market management. Factors such as the emergence of successful new varieties overseas may put downward pressure on prices, and short-term spikes and dips due to seasonal conditions are likely.

Returns in New Zealand dollars for kiwifruit improved in the year ended 31 March 2007 compared with the previous year, as the key exchange rates (against the euro and the yen) fell in the September and December quarters of 2006. Returns are likely to be seriously impaired by higher exchange rates in the year ending 31 March 2008, compounded by less favourable forward-cover arrangements. Free on board prices are forecast to rally in subsequent years as exchange rates moderate. (See Table 7.1.)

International prices

International prices for New Zealand’s 2007 crop depend in part on the supply of fruit from competitor countries. Stocks of Northern Hemisphere kiwifruit remaining in the market in Europe are relatively high at the start of the New Zealand selling season, and the Chilean crop is expected to be slightly larger than last year and is also being targeted at Europe. Chilean fruit reaches the market before New Zealand’s fruit does, so often achieves an early premium. Market conditions in Japan and East Asia are more positive, with low stocks of Northern Hemisphere fruit remaining.

Table 7.1: Kiwifruit export prices and volumes

	Actual				Forecast¹
Year to 31 March	2004	2005	2006	2007	2008	2009	2010	2011
Export volume (mil trays)	66	83	87	86	96	90	91	92
FOB² price ($/tray)	7.4	9.8	7.6	8.8	8.2	8.5	9.4	10.0

Notes
1. The forecast prices in the table assume no forward exchange rate cover is taken, whereas in practice the major exporter does take a degree of forward cover.

2. Free on board – the value of the goods delivered to the port of export and loaded onto a vessel for transportation out of the country of origin.

Source Statistics New Zealand and MAF.

Exports

Most of New Zealand’s kiwifruit crop is exported. Export volumes are forecast to be up 12 percent in the year ending 31 March 2008 compared with the previous year, due to a slightly greater bearing area and higher than normal yields per hectare. In following years, as the bearing area increases slowly, export volumes are forecast to follow the same trend.

The key markets for New Zealand kiwifruit are the European Union and Japan (see Figure 7.1). Over the past 10 years, exports to East Asian markets have grown, with South Korea now taking 7 percent of the volume exported compared with 2 percent 10 years ago. Chile is, however, becoming an important exporter to South Korea since negotiating a free trade agreement.

Figure 7.1: Kiwifruit export destinations, by value,
year ended 31 March 2007

Figure 7.1: Kiwifruit export destinations, by value, year ended 31 March 2007

Source Statistics New Zealand.

Overseas-sourced kiwifruit

ZESPRI International Ltd, New Zealand’s main kiwifruit exporter, purchases overseas-sourced kiwifruit to provide a 12-month supply of ZESPRI™-branded kiwifruit to key customers. It sourced suitable quality green kiwifruit from a range of countries, and licensed the production of gold kiwifruit in selected areas. The net value of overseas-sourced kiwifruit sold in this way has increased from $5.7 million in 2001/02 to $45.9 million in 2005/06, and is expected to rise further.

Production

Favourable seasonal conditions resulted in high yields per hectare for the 2007 crop of kiwifruit (harvested in the year ended 31 March 2008). Fruit size is small, because of cool spring conditions over flowering, but spring conditions were partially offset by ideal autumn growing conditions. The size profile for the earlier-flowering gold variety is expected to fit well with market requirements this season.

In the 2008 kiwifruit season, yields per hectare are forecast to return to more average levels. In the longer term, kiwifruit production volumes are expected to increase slightly. The release of licences to plant a further 600 hectares of gold kiwifruit will increase production. The nature and extent of the impact will depend on the proportion of the area that is planted in new kiwifruit orchards and the proportion that is planted with gold kiwifruit grafted onto existing green kiwifruit vines.

Taste and payment structure

Fruit taste, based on dry-matter levels, is reported to be good this season. The payment structure for the green variety has changed this season, providing greater incentives for high dry-matter fruit.

Contact for Enquiries

Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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