New Zealand: Braeburn falters

Here is a link to a USDA FAS report about New Zealand apple situation and outlook.

The late spring frosts (October 2007) negatively impacted on New Zealand’s apple crop during the 2007/08 marketing year. As a result, apple exports are forecast to drop 19,000 tons with virtually all of this volume being used for juice production. Processors are reporting increased volumes of 15-20% this year.
Looking ahead to MY 2008/09 production, it is not yet clear how orchardists will react to the low returns for Braeburn apples, especially the low prices during MY 2006/07, and the reduced yields during the autumn of 2008. It is expected that there will be continued tree removals this winter but there is no clear indication of the magnitude. Consequently, post has taken a somewhat conservative line regarding forecasts for production and export levels. It is expected at this stage that exports will recover and are forecast at 270,000 tons. Juice production is forecast at 110,000 tons, down from 125,000 tons in MY 2007/08. The industry is continuing to search for ways to increase profitability. While some orchards are being replanted with new varieties, such as Jazz, it is not happening as fast as many in the industry would like. Vertical integration of the industry is an on-going trend. There are several notable trends occurring in the New Zealand apple industry, including a reduction in grower numbers. The number of growers has fallen significantly from 1,600 in 2000 to approximately 400 in 2008. There is also trend toward vertical integration with large packers integrating with exporters who are then leasing or buying orchards.

Looking ahead.....

Production in MY 2008/09 will partly depend on the number of trees removed this year during June and July. At this stage, there is no clear indication of how many hectares of trees will be removed. The continued poor returns for Braeburn and Royal Gala varieties, which comprise approximately 70% of production, mean orchardists are looking very closely at whether it is profitable to keep growing these varieties. Some are planting new varieties, such as Jazz and Tentation, and production of these varieties is expected to grow steadily over the next few years. At this stage, post has taken a conservative view and estimates there will be less than a 1% increase in production to 437,000 tons of apples produced in MY2008/09, with 270,000 tons going to export and 110,000 tons for processing. While the new varieties already in the marketplace are profitable, there are several factors that temper a wholesale switch to new varieties. It is very expensive to replant and endure the time delay before production is economic. However, with intensive planting (+2000 trees/ha) on dwarf rootstocks, production is generally underway within two years of planting and is economic in four to five years versus double that under the semi-intensive systems. The pipfruit industry’s strategic review suggested replanting needs to achieve a rate of 10% to 15% per annum. At the moment, it is 7% in Hawkes Bay and 6% in Nelson – the two major growing regions. For those orchards growing Braeburn and Royal Gala apples that opt not to replant with new varieties, there are still opportunities. Industry experts recommend careful analysis of each block within orchards to identify areas where small sizing and poor quality is habitual. Then either these blocks can be grown only for juicing, with a consequent reduction in orchard costs, and some profit, or orchard management can be changed to improve returns. One option is conversion to organic production methods. Approximately 10% of New Zealand apple orchard area is already organic. While carton equivalent returns fell from NZ$50-55 (USD 38.50-42.35) in MY 2005/06 to NZ$35 (USD 26.95) in MY 2006/07, this was still a profitable option. It is likely that organic area will continue to increase. There are several notable trends occurring in the New Zealand apple industry, including a reduction in grower numbers. The number of growers has fallen significantly from 1,600 in 2000 to approximately 400 in 2008. There is also a trend toward vertical integration with large packers integrating with exporters who are then leasing, buying, or participating in joint ventures at the orchard level. ENZA (the former Apple and Pear Marketing Board’s single desk marketing brand), which markets apples for approximately 250 growers, leads the vertical integration trend. Because it owns the proprietary rights to the Jazz variety, it controls the planting of this variety and helps qualified growers with financing to replant. To achieve its overseas marketing goals, ENZA also produces Jazz apples in France, Chile, the United Kingdom and Washington State in the United States.

Two New Apple Varieties Announced

Hort Research, a crown (e.g. government) research institute, together with the Johnny Appleseed Company, has announced the commercialization of a new golden apple, a cross between Royal Gala and Braeburn. In addition, ENZA has announced its new variety, Envy, which is a further development of the Jazz apple.

Labor in Short Supply

Orchardists through out the country are facing labor shortages, especially for seasonal workers. With New Zealand’s unemployment rate at a historical low of 3.4 to 3.5%, there are few New Zealanders looking for seasonal work. Horticulturalists have brought in seasonal workers from other Pacific countries, such as Vanawatu and Samoa, under a New Zealand Government sponsored program.