Blog by Andrew Watters
Hail, bio-security incursions, market oversupply, long lead times between planting nursery trees and harvesting. These are all risks in a horticultural business. Yet on a tour through Hawke's Bay and the Bay of Plenty this week it was impossible to be anything other than very enthusiastic about the future of intensive agriculture in New Zealand.
The headlines for at least the kiwifruit and apple industry's are for record prices and returns, expanding plantings and infrastructure. But what does 'peeling back the skin' really show?
Firstly, the people are impressive. Post-farm gate operators like DMS (Kiwifruit), Rockit and Freshmax (Pipfruit) have a great mix of experience and youthful enthusiasm, and in the right parts of the business. The general managers and owners have been through several industry recessions but have learned the lessons and have a long term focus based on passion for their products and a constant emphasis on adding value, business improvement and innovation. This has created an ideal environment for young Kiwis to craft a career in growing industries; ranging from technical growing and management roles, packhouse management and business development and marketing roles. This combination of experience and enthusiasm is a winning combination that is relatively unique in world agriculture.
Whilst Horticulture has challenges in attracting local seasonal labour, NZ's RSE scheme for sourcing Pacific Islanders to work in NZ horticulture seems to be highly successful. People from for example Vanuatu have a lot of pride in the work that they do, are motivated to avoid embarrassing their village back home and have the opportunity to earn good Kiwi wages for the benefit of their family and their country
Secondly, its about location. The last 10 years has seen the opening up of Asian markets; for once New Zealand is in the right place. Our main competitors from the Southern Hemisphere (e.g. Chile, South Africa) are more remote which means their product is older in market.
Thirdly, NZ is making vertical integration work. Growers, post post -harvest operators and exporters work together to apply best -practice management from the orchard right through supply chain.
Fourthly, orchardists and their advisers and scientists have developed superior production systems that are driving yields and profitability. 30 years ago 4,000 trays per hectare was acceptable production of green kiwifruit. Today good growers are producing 12,000 trays as a result of orchard design and management innovations; the same can be said of apples. And higher production volumes are being achieved with the ultra low spray residue requirements of European retailers and the restrictive quarantine requirements of Asia.
Fifthly, growers and industry are producing branded and trademarked varieties with eating qualities preferred by Asian markets but with versatility for other markets as well.
MyFarm is providing access to horticultural investments for NZ investors that want exposure to a diversified and high returning asset class. We make regular offers of assets which are of commercial scale, where we can obtain an attractive forecast investment return and where we can offset risk through working with a high quality business partner to either lease or manage the enterprise. One such offer, Korokipo Apples, is a good example of the investments available to wholesale investors. If you are in the market for investments, please have a look here.