“As competition between the top fruit producing countries increases, and Chile being named the most competitive apple producer in the recent World Apple Report, the New Zealand (NZ) industry is starting to take measures in order to protect its strong position in this market,” says Geoff Murdoch, southern hemisphere procurement co-ordinator for Redbridge Worldfresh.
“To achieve this, growers and packhouses are adopting a voluntary quality standard to help maintain the good reputation of NZ apples. While these quality standards are not legally binding, they are being adopted by most packhouses who can’t afford to be singled out, by their supplying growers, competitor packhouses or by the marketplace,” adds Murdoch.
Pipfruit New Zealand has recently published industry best practice guidelines for growing, harvesting and packing, says chief executive Peter Beaven. He says: “It is expected the guidelines will become the minimum standard for NZ Class I fruit, helping to maintain the quality advantage over other southern hemisphere producers.”
Chairman Ian Palmer adds that to create niche opportunities, New Zealand’s biggest edge is to promote its production procedures - which have been undersold - and the further moves to residue-free production.
He says: “It’s about having smarter production, having a clean crop in the first part of the season and monitoring it well. The products now used are a lot more environmentally-friendly than most people realise, and growers more socially responsible with a good understanding of their products. This is what we need to sell.”
The top-fruit harvest in New Zealand is well under way and first apples are expected to arrive in Europe in the first weeks of April. However total volume estimates are down on 2004 by eight per cent from 364,000 tonnes to 336,000t.
Beaven explains: “News from the growers is that the crop is delayed by two weeks, but sizes and brix levels are up on 2004. Earlier concerns about wind and hail damage have not eventuated and Royal Galas are showing good colour.”
While the season ahead for top fruit looks stable, there is likely to be a shortage of the small apple sizes preferred by the UK at the start of the selling season. Growers had planned to leave apples of size 120mm or smaller on the trees, believing them to be uneconomical, says Murdoch, but crop yields have been 15-20 per cent less than predicted, forcing growers to pick the smaller fruit.
He adds: “Consequently this fruit has been harvested late and won’t reach the supermarket shelves until later in the year; there is likely to be a rush of controlled atmosphere Royal Gala arrivals in late June and early July.
“There is set to be a large reduction in the number of Cox apples available this season, but Royal Gala are firm and taste good. The high temperatures from late December through to now, particularly in Nelson, have caused many Braeburn apples to suffer from sunburn, which could be an issue later in the year.”
Tom Fleming at Hart and Friedman says the first Cox arrivals should be ready for delivery on April 11. “Exporters are sending less fruit this year to ensure parity in the market. The fruit is on the small side across the three main varieties exported; Cox, Royal Gala and Braeburn,” he says.
“There will less Royal Gala exported, down by seven per cent with the main reason for reduced volumes being the increase in competitive supply from Chile, Brazil and now Uruguay.”
He adds exporters will be cautious with Royal Gala this season and they don’t want prices to get any lower. H&F has an historical partnership with Enza to supply wholesalers, packhouses, small independents and co-ops, and Fleming stands by the NZ fruit. He says: “Despite volumes being lower this season, quality is never in doubt. The competition comes from cheaper alternatives but New Zealand has the better fruit. Jazz™ continues to sell well; last year prices reached 2000p for 12.5kg but this year expectations are that prices will drop by 20-25 per cent to accommodate the larger volume on offer this season.”
Tony Fissette, European managing director of Enza New Zealand, says since regulation trade has been difficult. “The reality of 2004 was that 20 million cartons were sent but forecasts for 2005 are for 16-17 million. It is still too early to get a clear picture but it is expected that volumes will be down by a minimum of three million cartons.”
He adds that with so many exporters in the sector it makes it unclear about where the fruit will ultimately go. “There may be a shortage in small fruit on offer which will mean more fruit will be sent to the Continent rather than the UK. And exporters prefer to send to Europe rather than the US because of the favourable exchange rate, along with an oversupply of apples in the US marketplace,” he says.
On the flipside, with the majority of the southern hemisphere top fruit growers looking to Europe instead of the US, this could then result in an oversupply here and prices to drop. “At the moment prices for South African Royal Gala are low and more volume arriving here won’t help the price,” says Fissette.
“New Zealand growers however have been focusing on improving the poor returns due to the low prices over the last few seasons. Responsible growers are looking at keeping high quality rather than just putting every apple in a carton for export. In addition, exporters do need to collaborate if they want to get better prices for their apples - Royal Gala production is in so many hands - but this is not yet common practice.”
This is one of the latest starts to the season Fissette can remember in his 30 years in the trade. He says: “This doesn’t help with a natural short season for New Zealand apples. But we are looking at good volumes for Cox and a good market. Royal Gala will be difficult in the next two months and we may not see them appear until the end of May and run to July. Prices may also be difficult but by May we will have a clearer picture as to how prices are moving.”
Fissette believes New Zealand grows the best quality Braeburn worldwide and that the variety should have a better season as there are less importers involved and better export controls are in place.
Murdoch says with more changes and belt tightening on the horizon for the New Zealand top fruit industry and other fruit exports to Europe, it is likely that more growers will align themselves with receivers (category managers) such as Redbridge Worldfresh. He says: “This will result in a reduction of exporters, but will put more money in the grower’s pocket.”
One exporter Applemax traditionally ships about 50-60 per cent of its exports volumes to the EU. “This season there are no plans to change this,” says European export manager Alex Schenz. “As mentioned in various industry publications, the New Zealand crop forecast for 2005 is down on the record volume of 2004 - predicted export volumes are 18.7 million cartons (as of January 2005) which are more in line with historical quantities.”
He adds: “Cox sendings will arrive as early as week 13 to supply the retail programmes. However Royal Gala exports will be about two weeks later than normal due to slight delays at the start of harvest.”
This delay may actually be better for sales in light of the big inventory in store from last season’s European harvest.
“Of course the oversupply in European stock levels has led to an adjustment of our export volumes and timing. Increasing competition from other southern hemisphere growers, in particular Chile means that, in the long run, New Zealand has to compete with our strengths of service and quality. Ironically quality is often blamed for market problems but in fact big harvests just result in an imbalance in supply and demand,” says Schenz. In Europe, Applemax has two routes to market - predominantly supplying retailers to meet sales programmes but also the wholesale markets.
Schenz says the changes to marketing/export plans have been primarily driven by exchange rates and transport costs, which have increased considerably over the past 12 months. “As a result, the markets closer to New Zealand are preferred and sales to the local market have increased,” he says.
Recently discussions about access for NZ apples to Australia have gained new momentum. In principle Applemax would appreciate an opening into the Australian market, says Schenz, as this would allow the company to complement existing business relationships, which its exporting group, Intermax, already has there. He says: “However as market access is mainly a political/administrative process, forecasts as to when access will be permitted are difficult.”
Australian access for New Zealand growers would benefit and help earnings which have been down in the last two years. “It is a difficult time in the industry and growers need to be market wise,” says Palmer, “as many still think their work ends at the orchard gate.
“They need to understand the market all the way through to the customer and to meet that demand. Quality is crucial as many UK suppliers are now just looking for southern hemisphere supply and not solely NZ fruit - they are just after volumes.”
Palmer has been a top fruit grower since 1994 and has converted Cox, Gala and Pacific Rose orchards to plant Jazz™. He says: “It is a good eating apple but growers have few options when planting new varieties. Some European varieties look promising but it is necessary to work with the northern hemisphere to grow demanded varieties in order to be an off-season supplier.”
Fissette agrees that Jazz™ stands in a league of its own and is still in high demand. “There are not enough volumes to meet all the demand from retailers. It is a top quality apple with a great future. Our first experiences with French production went well and we are already looking at UK plantings.”
He adds there are too many apple varieties available in the global sector which need to be managed like products in other industries. “With Eastern Europe and China adding pressure to the supply base the industry needs to do something new like the Jazz™ variety, but volumes need to be well managed because the customer base is not growing at the same rate.
“If Royal Gala prices remain at current levels and volumes in oversupply then it will be impossible for growers to survive. The industry needs to market with better control and learn from past seasons. Brands may demand a few more euros but they don’t guarantee survival,” Fissette says.
Being an independent exporter, Applemax was quite satisfied with the quality output of its YESS branded product. Schenz says: “This proves the branding concept is working. Furthermore, despite the difficult season last year, we have continued to invest in the post-harvest sector by expanding our cold store facilities and investments in the packhouse. Growers see this as a long-term commitment by Applemax to the industry and accordingly reward that with confirmed supply agreements.”
Palmer believes that the difference between success and failure lies on the development of good business models. He says: “An inherent problem in the sector is a lack of cashflow restricting growers from forming long term strategies; it has become survival form year-to-year which may cloud long-term thinking. Increasing competition requires greater attention to detail and global trends from us.
“More and more growers blame exporters for the current problem but what we’re missing is a strong brand such as New Zealand Inc. We’ve got an image of people and culture that is globally recognised and we should use it to open doors.”
JUST THE JOB FOR PICKERS
A major recruitment drive PickNZ has resulted in more New Zealanders interested in fruit harvest in Hawke’s Bay than ever before. In January Hawke’s Bay’s fruit industry and Work and Income New Zealand (WINZ) launched the website, www.picknz.co.nz, as a new tool aimed at stopping the seasonal labour shortage threatening the nation’s horticultural industry. The website is a pilot programme being tested during the Hawke’s Bay top fruit season. New Zealand Fruitgrowers Federation director Ru Collin says PickNZ has helped take the threat of a crisis out of the seasonal labour shortage and turned it into an opportunity.
The website matches growers with job seekers looking for work throughout the season, who hopefully return or gain permanent jobs in the sector. So far there have been 13,000 visits which total over 4.6 million hits to the site and 3,346 job applications have been processed for employers since going live. The most popular job has been for pickers.
Collin says during February’s peak gala apple harvest more than half the people seeking work through the Hawke’s Bay Fruit Growers Association office were New Zealanders.
The Braeburn harvest is just getting underway and once again the hunt was on to find people to pick and pack the crop. Once the season is over, says Collin, the success of PickNZ in Hawke’s Bay will be measured and considered for a national roll out in time for the year’s fruit harvesting season.
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