Tuesday, 02 August 2022 09:25

Export returns mask profitability

Written by 
Onions New Zealand chief executive James Kuperus. Onions New Zealand chief executive James Kuperus.

Onion export returns may look good for NZ, but the actual earnings for growers is far from great.

Onions New Zealand chief executive James Kuperus says it's been an incredibly difficult year for the sector. He says there's going to be a drop in revenue for growers due to increases in inputs including fertiliser, chemicals and labour. He says, on top of this, there have been massive shipping problems.

"All these factors have combined to reduce profitability right across the primary sector," Kuperus told Hort News.

He adds that there have been compounding issues with getting product out of the South Island to market, due to a lack of ships and containers down there. Kuperus says the weather has caused problems with a drought in Pukekohe, one of the main onion growing areas in the country, which reduced yields; the same happened in Hawke's Bay.

However, Kuperus says it was the heavy rain that caused problems in the Manawatū and Horowhenua regions.

"The result is that overall onion production is down by about 20%, which is very high.

"But at the same time, it's not a bad year to be down on production with the shipping issues," he explains. We probably wouldn't have been able to ship product if we had more and the end result is a difficult season, but it could have been worse."

Just on 80% of the onions grown in NZ are exported, with the main market being continental Europe - with Indonesia, Japan and Malaysia also taking some product. Kuperus says, in the past season, getting product to Europe was very difficult due to the shipping disruptions.

"Historically it would take about six weeks to get product to Europe, but in the past year it could have taken up to ten weeks," he says.

"With Europe it's a counter essential supply so we have a very limited window to get product in, so the net result was we were slightly back on sales to Europe but fairly consistent for the rest of the markets."

On the domestic market, he says it was pretty much business as usual and although there were some price fluctuations, the returns to growers were about normal.

Looking to next season, Kuperus says planting has started in Pukekohe and planting preparation was good despite some quite heavy rainfalls. He says growers are still going to have to contend with increasing input costs and says they will have to factor that into their businesses.

Kuperus says with rising fertiliser prices, growers will have to optimise its use, but adds if they cut back too much they run the risk of reduced yields and quality.

Tears of Joy For EU Deal

Kuperus says the future prospects are looking quite good with tariffs coming off in the UK and the slightly longer prospects of tariffs coming off in the EU as a result of the recent FTA.

He told Hort News that in the last three years NZ has exported on averaged $75m worth of onions a year to the EU. Kuperus says the tariffs on these exports range from between $6.5m to $7m a year.

"For our industry that is quite a substantial saving."

Kuperus says it's likely to be 2024 before the EU FTA officially takes effect. He says the onion sector is very grateful for the excellent work done by the NZ trade negotiators.

More like this

Tears of joy for onions

Onion growers will be saving $6.5 million on tariffs once the free trade agreement (FTA) with its number one market – the European Union – is ratified next year.

Tears of joy over EU FTA

The New Zealand onion industry has welcomed the recent signing of the free trade agreement (FTA) with the European Union (EU).

Teachers getting to know their onions

Teachers from around the Auckland, Waikato, Hauraki Plains and Coromandel areas recently got a chance to really know their onions on a mid-March Teachers' Day Out.

Damper on NZ onion exports?

The recent wet weather in the Pukekohe area has added to pressures to get early onion export shipments away on time.

Featured

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

Editorial: Passage to India

OPINION: Even before the National-led coalition came into power, India was very much at the fore of its trade agenda.

National

Bumper cherry exports in 2024

New Zealand cherry producer Southern Fruits International expects to send up to 340 tonnes of luxury cherries to the global…

Machinery & Products

Pollution into fertiliser

While the new government is sure to “tinker” with the previous administration’s emissions policy, a recent visit to New Zealand…

Smart money backs smart machine

Marlborough-based start-up SmartMachine claims its new machine is one of the most significant operational step changes for viticulture since the…

Robo packer hits a billion

New Zealand inventor and manufacturer Robotics Plus Limited’s fruit packing robot has hit a major milestone of one billion pieces…

Crop care business expands

Five years ago, agricultural machinery specialist Lemken acquired the Dutch company Steketee B.V and expanded its crop care product portfolio…

» Latest Print Issues Online

The Hound

Why?

OPINION: A mate of yours truly wants to know why the beef schedule differential is now more than 45-50 cents…

Fat to cut

OPINION: Your canine crusader understands that MPI were recently in front of the Parliamentary Primary Sector Select Committee for an…

» eNewsletter

Subscribe to our weekly newsletter