New Zealand Apple Industry Enjoys Second Strong Season In A Row
The chief executive of Apples and Pears New Zealand, Danielle Adsett, says fruit quality this year is phenomenal and the sector is hitting crop estimates, which is great for growers.
T&G Global, which grows apples, tomatoes, citrus and blueberries, and partners with over 800 independent growers to export to 60 countries saw its operating profit plunge from a $20 million in 2022 to a whopping $46m loss last year. The listed company’s net loss before tax ballooned to $64.2m, compared to a $3.3m loss the previous year.
Another listed company, Seeka Limited posted a half-year net loss of $14.5m, down from a $6.5m profit the previous year.
Both companies blame weather event s for their financial woes. Cyclone Gabrielle, which hit Northland and Hawke’s Bay in February last year left some orchards in ruins.
T&G Global chair, Benedikt Mangold says their loss reflected both the cyclone’s physical and fiscal impact and a challenging year in terms of growing and economic conditions.
“After three seasons of COVID-19 related disruptions, we came into the 2023 financial year focused on converting increasing demand into higher sales volumes,” says Mangold.
“But the weather had other ideas. The February cyclone completely disrupted our apples operations in Hawke’s Bay for five days, destroyed orchards on some 13% of our planted hectares and interrupted our supply chains for export and domestic crops. The cyclone, along with five-year highs in rainfall and lows in sunshine across the year, made conditions more than challenging.”
Mangold describes the cyclone “an exceptional event in an exceptional year”. But he adds that while it influenced the financial result, it did not undermine progress within the business or the strength of T&G’s strategy.
“The impact will add at least 18 months to our strategy’s delivery, but it did not destroy its strong foundations or our confidence that we are on the right track. This meant we were able to keep achieving several positive milestones, despite lower volumes, financial constraints and some challenging growing conditions.”
He points out that confidence of BayWa AG, T&G’s ultimate parent company, in the strategy and its delivery was demonstrated by its willingness to provide a $24 million subordinated facility to support cyclone recovery work and working capital through the year.
Despite the setback, T&G is bouncing back with some milestone achievements.
T&G Global chief executive, Gareth Edgecombe says the clear focus on winning in key markets saw its apples business launch a fast-start programme to get Envy into high value Asian markets as quickly as possible following the March harvest.
“With 45,000 tray carton equivalents (TCEs) exported across five to six weeks, the programme set a record for New Zealand air freight. Its success was a team effort across harvesting, quality control, packing, freight management and in-market promotional support. We also achieved good growth in the United States with strong support from our Washington growers,” says Edgecombe.
Across at Seeka, a difficult 2023 harvest was extended beyond cyclone-affected areas and even in Australia. But the company is also bouncing back with better marketing and suspending dividends and reducing overheads. Seeka is one of the country’s largest kiwifruit growers and also exports apples and pears.
Seeka chief executive Michael Franks says the 2023 harvest was difficult right across the horticultural sector, as a warm wet winter, cyclones and hail significantly impacted orchards in New Zealand and Australia.
Yields were down across the industry, with Seeka only handling 30 million trays of class 1 New Zealand kiwifruit in 2023, compared with 42 million in 2022.
"While 2023 volumes were materially down, Seeka’s operational performance between the orchard and point of sale was excellent. More than 99% of the kiwifruit we packed for our growers was delivered on time and in spec to the marketer Zespri, and the quality of our fruit supplied to the international consumer was the best in the industry,” says Franks.
