After a troubling season in 2004, last year was a supremely challenging one for New Zealand apples, in anyone’s book. A high exchange rate toughened sales in the US and diverted southern hemisphere crop into Europe; South American exporters entered win hefty supplies; traders disregarded contracts and brought fruit in with or without an end market; and the European market was so overwhelmed with stored local fruit in February that prices came crashing down for all apples, old and new alike.
As the 2006 southern hemisphere gets underway, the situation looks a little brighter for NZ exporters, by all accounts. It seems some hard lessons have been learned and the industry has set itself up for a somewhat easier ride. “Based on the poor results of last year there is a lot less fruit out-of-programme being shipped to Europe which is the important thing,” says Chris Rowe, account manager at Redbridge Worldfresh. “As long as you bring it in with a customer waiting there is no problem, it is when you bring it in on a speculative basis that the problems arise.”
NZ has been singled out by some as being responsible for the price crisis of last year, but Rowe is quick to highlight that it takes more than one player to create such wide-reaching mayhem. “The problem is with the whole industry trying to get involved in something speculative,” he claims. “It is not fair to blame NZ. They can’t afford to be cheap so they would never set out to lower prices. Mismanagement of imports and exports and mishandling of stocks caused the market to be oversupplied, so NZ apples were cheapened.
“The general oversupply situation in Europe was caused by excessively stored European fruit. Stored Dutch and Belgian apples were available well into August, which is madness. How a European can blame someone in NZ for a price crash when they work to real, fixed prices I don’t know,” Rowe adds.
Alex Schenz, of NZ apple exporter Applemax agrees the context of the situation was highly complex, with NZ’s unfortunate position rendering it a useful scapegoat. “NZ dominance in Braeburn, one of the last varieties in the market, culminated in September/October when European harvests became available, so it became convenient to point to NZ as the main culprit,” he says.
Reports indicate exports will be significantly reduced this time around. The original estimate was for 15.5 million cases, or 279,000 tonnes - compared with 20m cases (560,000t) two years ago and 18m (474,000t) last year. Pipfruit NZ expects the real volume to be down on this estimate, however, with total shipments pitched somewhere between 13.5m-14m cases. Exports of the early season varieties are some 10 per cent down. Cox has been arriving since the end of March and, while the forecast was for 667,000 cases, at the time of writing only 570,000 had been shipped. Royal Gala is also starting to trickle through, with packers reporting similar reductions.
Peter Beaven, chief executive at Pipfruit NZ, says sizing is variable across different crops and regions. In general, the Cox crop is on the small side, as is the Royal Gala crop in Hastings, while Royal Gala coming out of Nelson is much larger, he says. However, all arrivals in the UK have met a good response, with importers agreeing brix levels are markedly higher this year and the fruit’s eating quality the best they’ve seen for several years. Harvests have been on time, if not early, like Cripps Pink, which started last week, seven to 10 days earlier than last season and the earliest date on record.
As for the market, Beaven suggests the EU is in better shape than last year. “Exports from most southern hemisphere origins are down and the exchange rate is better for us than last year,” he explains. Schenz agrees that prospects seem positive for new arrivals: “The efforts by the European industry to clear out northern hemisphere inventory have assisted to avoid a detrimental over-hang so we should be able to maintain the vital balance of supply and demand.”
On the other hand, some exporters fear an increased uptake in the use of life-extending SmartFresh technology across Europe will affect demand. The technology has reportedly affected storability of Royal Gala, and, while it cannot be used on Braeburn, some are anxious that stored fruit of other varieties will have built-up in Europe by the time NZ’s Braeburn shipments arrive.
NZ has traditionally been an ideal source for the UK, with its stronghold in the popular Braeburn, Cox, Pink Lady and Jazz varieties. And, neither side seems to have been dissuaded by the disappointing experiences of last year. “The UK was not so bad for NZ last year, as the problems mainly emerged with late Braeburns on the continent,” Schenz explains. However, the latest report from Pipfruit NZ has announced depressed prices in the UK, with Cox selling for 20p less than the past two years. By contrast, prices in Europe are up to E19-20 for large-sized Royal Gala and NZ has already received good levels of enquiry there for Braeburn.
Like suppliers from all corners of the globe, Beaven warns that UK demands may not be sustainable in the long run. “NZ is a high-wage country and has greater shipping costs, so the prices UK retailers are prepared to pay mean that most NZ suppliers have lost money for at least the last two years,” he says. “The UK retailers need to understand that if they want to sustain supplies from their NZ customers, they need to pay enough to enable NZ growers to survive and reinvest. If this does not happen, it is inevitable that the NZ industry will look to develop other, better-paying markets that will sustain the business.”
The US is one market from which NZ will be hoping to see better results, having sent such low volumes there last year. “Everyone thought the US market was going to be bad, so the Chilean and NZ fruit went to European markets,” Beaven says. “If there had been better communication between the parties we could have picked up a market improvement earlier.” To this end, Beaven is calling for greater co-operation between southern hemisphere producers and a greater commitment to generic promotion, facilitated by international organisations, such as SHAFFE (Southern Hemisphere Association of Fresh Fruit Exporters) or WAPA (World Apple and Pear Association). He points to the way blueberry growers have exalted the health benefits of their product as an ideal example to follow.
With the cost of transportation continuing to rise, closer markets are inevitably appealing and many exporters are looking to strengthen ties with Asian importers. In this Darwinian age, Rowe suggests the NZ industry would be well-served to cast the net as wide as possible, rather than opting for specialisation. “There is no point being the best Braeburn grower in Hawke’s Bay anymore,” he says. “Braeburn is not going to yield best prices, you have got to have some of the Asian varieties. Europe is not the only market and there are varieties we don’t even see. Producers have got to have a spread of varieties and a spread of market options.”
NZ’s options have been distinctly hampered of late, however, owing to Australia’s persisting trade barrier on the grounds of disease risk from NZ fruit. The closing date for stakeholder submissions to Biosecurity Australia elapsed at the end of last month and it has declared the process of considering submissions, scientific reviews, the formal appeal period and final policy determination period will be completed by the end of the year. But Beaven is not convinced this deadline will be met and is preparing accordingly. “Unless Biosecurity Australia is prepared to get real and follow the WTO decision on fireblight we will end up at the WTO,” he says. “The government has always indicated they would support this if the Australians don’t allow the science to prevail.”
Meanwhile, the industry is beset by further legislative hiccups, in the form of a delay to the grower vote on the renewal of the top fruit commodity levy. The NZ ministry of agriculture has recommended the levy be pushed back from April until July so that it can be based on production from the current season’s crop. The industry has been hindered further by a chronic labour shortage, exacerbated by the untimely start of kiwi harvesting this year. In this respect, therefore, the reduced apple crop may be something of a blessing in disguise, says Schenz: “The kiwi harvest has come forward and will therefore overlap with the late apple varieties. However, despite all the operational issues involved, it will not really have an impact on the progress of the apple harvest since the crop volumes are down anyway.”
If this year lives up to expectations, prices should be significantly more favourable than the past couple of years, although these disappointing experiences have inevitably forced the sector to revaluate its position in the global market. Consolidation is ongoing and grower numbers have dropped from 1,500 five years ago to 650 today. “Older orchards and low-performing varieties are being given up first,” Schenz says.
Beaven believes the industry is on the cusp of varietal change, with newer breeds such as Jazz and Sweetie set to make a bigger impact in the future, as well as a new red-fleshed variety, which has yet to be introduced in commercial volumes. Schenz, meanwhile, points out that the struggles of last season may have made some growers hesitant to take risks in investing in newer breeds.
The industry is pinning considerable hopes on Jazz taking over from Braeburn as a sweeter, better hybrid. Enza, which owns the brand, has commissioned growers in France and the US to keep up supplies, and therefore demand, in Europe when NZ is not in-season. Rowe, however, is not swayed by the suggested superiority of Enza’s protegé. “I think Jazz is overrated,” he says. “I don’t think it will ever replace Royal Gala or Braeburn and it will probably go the same way as other premium varieties. Once they have planted too much it will be like any other apple and just take a commodity price.”
Whatever varieties the industry selects, Rowe emphasises the importance of recognising its limitations. “In the long-term I think NZ growers will be best-served by looking at niche markets on a reduced-volume basis,” he says. “If they stay around the 12 million carton mark they will be fine but if they hit 20m cartons by nature of their cost they simply can’t compete with Brazil, South Africa and South America, in general, on cost so they will always be on a base footing and not get the money they need.”
Pipfruit NZ agrees that quality, rather than volume is where the industry can show its strength. It was this thinking that prompted the launch of a “trustmark” to indicate a measure of quality and an adherence to market specifications. Owing to its introduction late last year, it did not make it onto much of the packaging for this season, Beaven says, but he is expecting a much greater uptake for next year.
Another positive step has been the formation of a marketing panel, a forum for discussion among exporters. According to fellow Pipfruit NZ representative, Gary Jones, the feedback has been very supportive, and he suggests such communication will be invaluable in responding to the toughening marketplace, and sidestepping disasters like last year in the future. “Growers can be reassured that their exporters understand more about the markets than they have since deregulation,” he says; “that this information will allow exporters to compete, understanding the conditions of the markets, and allowing the natural strengths of the exporters to come through.”
DNA DATABASE REVOLUTION
Scientists at NZ-based HortResearch say their forthcoming release of the world’s most extensive collection of apple DNA sequences could potentially revolutionise the produce industry by allowing producers to breed apples for taste, health and colour.
The report contains more than 50,000 apple gene sequences - referred to by scientists as expressed sequence tags (ESTs) - DNA sequences from active genes in the plant that govern various characteristics.
Fruit breeders will be able use the ESTs identified by HortResearch during the last six years, to create new apple varieties, tailored to suit consumer tastes, health requirements, and the demand from industry for fruit less prone to disease.
“By understanding fruit at a genetic level we are able to unlock the true potential of nature and present industry with products that meet consumer demand for attractive, novel, exciting new fruits that taste great, are healthy, convenient, safe and sustainably produced,” says HortResearch’s chief scientist, Ian Ferguson.
Ferguson says the EST database has already helped expand scientific understanding of apples, enabling the company’s scientists to identify a key gene involved in apple colour expression.
“Further work with the database will undoubtedly yield even more exciting advances in the future,” he says.
Ferguson expects that releasing the ESTs into the public domain will serve to enhance the speed of discovery.
“We will see a multiplier effect, where discoveries made in other countries will benefit our work and speed up cultivar development. There will also be opportunities for HortResearch to become involved in collaborative research programmes,” he suggests.
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