Kiwifruit rationalisation needed and soon

Restructuring the industry down to two to four large post-harvest suppliers to Zespri  - rather than the existing 20 plus of varying size – would bring a grower benefit of 30-50c a tray, Sharp told Rural News.

EastPack is proposing industry restructuring after the grower-owned cooperative announced a forecast result of $6.2 million for the year to December 31, 2012. The company says it has achieved efficiencies while retaining staff and anticipates some of the highest orchard gate returns in the industry (see sidebar).

Sharp says EastPack has seen the benefits of a good scale operation in lower packing prices and good returns.. “It is only something we have improved over the last three years,” he says.

All pack houses face lowered margins in the competition for reducing volumes in the Psa environment, he says. “A lot of post -harvest operators will struggle to make money,” he says.  “As long as we have volume, we (EastPack) will continue to make money with the cut margins…. And that’s the sense in which we will try and lead the way, because we think we’ve seen the light.” 

Sharp says rationalisation is desirable “rather than post-harvest operators continuing to defend their position to the last and losing viability”.

The industry does not yet know what the recovery situation may be and it may have to live permanently with lower volumes. “We think there is 30-50c a tray benefits for growers and owners by achieving that rationalisation. That is very significant when green growers are operating on very fine margins, due to challenged returns from the marketplace.

“Part of that challenge is the rising New Zealand dollar and the competition in the world market makes it impossible to continue to ramp up the sale price. So you’ve got to look for efficiencies in the systems between market and grower.  Two avenues are the Zespri supply chain and the post harvest.”

Eastpack chief executive Tony Hawken says all post-harvest companies are scrambling to maintain their volume because of Psa.

“We’ve got a (financial) result that would be among the top echelon, so would be particularly enthusiastic about expanding our market share.  It is logical with contracting volumes that those volumes are centred around the most efficient plants, not only efficient in terms of costs but also highest quality – they turn out a good product.

“If we all compete for ever shrinking volumes, there will be no real winners at the end of the day.”

Regarding industry moves he says “everyone is talking to everybody at this stage”.  In the end growers will decide “because it is an industry pretty well dominated by growers”,  Hawken  says.