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IP, unique market positioning key to sectors’ growth.

30/May/2019


Export data released this week shows the horticulture industry is on track to meet its goal of being worth NZ$10 billion by 2020, and the $400m growth in export revenue generated by horticulture in 2018 offers further encouragement to those actively investing in the fastest growing permanent crop sectors.

According to the latest Fresh Facts, published annually by Plant & Food Research, horticultural exports have tripled from $1.7 billion 20 years ago and account for almost 10% of New Zealand's total merchandise exports.
Increasing global demand for New Zealand's high-quality food is well established but several other factors have driven the current improved fortunes for horticulture, including the development of product uniqueness with trademarked intellectual property, application of new technology to production, storage and distribution and targeting new market segments in Asia and wealthy Western countries.

Kiwifruit, under the leadership of Zespri is one of the most successful sectors. Plant Variety Rights (PVRs) provide control over supply volumes and enable brand and marketing development. The availability and development of land beyond the traditional Bay of Plenty growing region means the kiwifruit industry is facing further prosperous growth. Backed by the success of its SunGold variety, Zespri has plans to grow global supply from 58 million trays in 2018 to around 250 million trays by 2025. It estimates demand for New Zealand kiwifruit could reach 350 million trays in ten years.

The apple industry's development of new varieties is one of its key advantages over international competitors, along with the emergence of more intensive production systems. The latter will help lift average yields which have remained fairly static and ensure orchard gate returns continue to rise with the production of protected new variety apples. The diversified international demand for New Zealand's new varieties presents the other significant cause for optimism with shipping costs lower and prices higher than has been the case in the past.

The avocado sector is a little different in that plant variety protection is not in place, but it has distinct advantages in its unique international marketing window. The growth of the sector in Northland, away from the Bay of Plenty where avocado growing is most intense offers further advantages with lower biennial yield fluctuations that characterise avocado production elsewhere. The industry has aspirations to double the current total sales averaging around $152m over the next decade by capitalising on new demand from Asia.

Emerging sectors share similar upside potential. New Zealand's niche production of hops accounts for less than 1% of global production but the 1,000 tonnes produced each year is expected to double by 2025 with the potential to shorten the supply chain and sell branded products direct to craft breweries in the US and elsewhere.

The New Zealand cherry sector is similarly small, producing only 0.1% of global production and accounting for 0.5% of global trade. However, like avocados, its marketing window is key to its success with the ability to supply high-quality fresh cherries for the main festive season in Asia – the Chinese New Year.

The unique qualities of NZ Manuka honey have been well documented with its unique antibacterial and healing qualities. Superior quality, unique manuka factor (UMF) and brand power mean there has been little direct competition. The supply growth of 8% is not keeping up with double digit demand growth and New Zealand's largest producer Comvita expects to grow its supply base using plantation manuka.

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