It says that export receipts were up a significant 43%, at NZD $1.44bn on an FOB basis. Forecasts for 2016 indicate a period of consolidation with production and  exports up 1.5% at 482,400MT and 460,400MT respectively. However over the next four to five years  export volumes are likely to resume a faster growth rate, expanding by an estimated additional 20%.

The main driver behind the expected production increases is the new and very successful Gold kiwifruit variety G3. Plantings and grafting’s of the G3 variety began only relatively recently, in 2010, yet now comprise 4,600 hectares, or approximately 35% of the total kiwifruit area in New Zealand.

Production

The kiwifruit sector’s recovery from the devastating bacterial disease PSA(v) is well and truly in full swing. Production in 2015 (January 1 to December 31) is estimated at 475,000 metric tons (MT). This is 30% greater than the estimated production in 2014. The estimated harvested area in 2015 was 12,225 hectares (ha), which is 9% greater than the previous year.

The huge increase comes about from:

• A big jump in Gold (variety G3) kiwifruit area harvested, from 2,500 ha in 2014 to an estimated 3,500 ha in 2015;
• A superb growing season in 2014/2015 after which the highest ever nationwide average yield for Green variety was recorded.

Looking out to 2016, the production forecast is for 482,000MT, a small increase of 1.5% over 2015. Beneath the relatively stable total production the mix of varieties will alter significantly:

• Anticipated normal growing conditions should mean Green variety fruit yields will be reduced;
• Production volume of Gold (G3) variety fruit will continue to increase, and is expected to comprise about 36% of total NZ kiwifruit production because of a further increase in harvested area and increased yields per hectare as the Gold G3 plantings start to reach maturity.

Kiwifruit production is expected to increase by about 20% from 2016 before stabilising in 2018 at a forecast level of 570,000MT per annum.

The main driver behind the production growth is the increased area of Gold G3 kiwifruit, which has replaced the original Gold variety Hort16a. Prior to PSA(v) Hort16a comprised approximately 2,500ha but has now all but disappeared because of its susceptibility to PSA(v). The licenced area of Gold G3 kiwifruit is 4,600 ha which will be in full production between 2018 and 2020. Mature yields are conservatively forecast at 14,000 trays per hectare (a tray is 3.6kgs of 28 to 36 individual fruit, the normal graded and packed unit of measure in the industry). This level of yield per hectare is at least 40% greater than the Green variety and significantly greater than Hort16a.

Growers getting better

Since the onset of the vine killing bacterial disease PSA(v) in 2011 nearly every kiwifruit orchard in New Zealand has been infected. New Zealand orchardists have had to up their “management” game to continue being able to grow commercially viable yields with the threat of PSA(v) always present (especially in cooler, damper weather).

Most growers now have a proportion of both Green and Gold varieties in their orchards. Green and the new Gold G3 varieties are resilient to PSA(v) if managed well and grown in warmer, drier sites. The main methods to control PSA(v) are now:

• Copper sprays at low rates preferably before rain and onto any pruning cuts;
• Not making any pruning cuts to the vines in wet conditions;
• Vigilance at spotting symptoms and cutting infected sections of vines out promptly.

The side benefit from better management vigilance has been an overall lift in productivity. Over the last twelve years, Green kiwifruit yields have risen at an average of four percent per annum with a real step change being achieved over the last two years. Simultaneously with yield increases the Dry Matter (DM) percentages in the fruit have trended upwards. Higher DM levels increase the taste of the fruit.

New varieties

Zespri, in conjunction with the Plant and Food Crown Research Institute and the NZ Government, conduct ongoing plant breeding research on a 33ha site in the main kiwifruit growing area Te Puke in the Bay of Plenty. As part of this research, approximately 100,000 different seedlings are  assessed at any given time.

A new Green-type variety with better taste and higher yields, along with a new red fleshed variety, are in pre-commercial trials at present.

Exports, marketing and trade Policy

Total New Zealand kiwifruit exports are estimated at 454,000MT in 2015, representing an impressive 31% increase over exports in 2014. The size of this increase is testament to how quickly growers have been able to get the new Gold G3 variety up to mature yields and the superb growing season in 2014/15, which maximised yields in the orchards.

Looking forward to 2016 the forecast is for a consolidation year with exports increasing by only 1.4% to 460,350 MT. However the variety mix exported will change considerably with Gold kiwifruit volumes up by an estimated 30% and comprising 36% of the total volume of kiwifruit exported from New Zealand.

In four to five years when the present growth cycle of production matures, exports are expected to be on the order of 540,000 to 550,000MT per annum, or 18-20% above the current level of exports.

The USDA analysis reports that while the northern EU. takes the biggest volume it does so at a significantly lower FOB price per ton (44% less) than Japan.

However, not only is there a higher pricing structure for all kiwifruit in Japan, Gold kiwifruit comprise 36% of all kiwifruit sold in Japan but only 17% in Northern E.U. Zespri Gold sells at a premium to virtually all other kiwifruit. China is similar with shipments of Gold kiwifruit making up 37% of the total.

The USDA says that a core strategy for Zespri, in order to maintain current price/demand relationships in its more mature markets with the increased supply coming on over the next four years, is to invest strongly in developing markets.

For Zespri these are:

• China, it is thought that at least another 20-25,000MT of fruit could be absorbed by this market at current pricing;
• Latin America, especially Brazil;
• Turkey, though there are high tariffs to contend with;
• Middle-East, however demand may be stifled in the short term in the current low oil price environment;
• Mexico, the Trans Pacific Partnership Trade Agreement is scheduled to reduce tariffs on kiwifruit in all member countries to zero at entry into force; Mexico is part of the TPP. Zespri ran a promotion during 2015 with McDonalds in Mexico distributing kiwifruit with the meals;
• South Korea, the new FTA with NZ came in to force in December 2015 which will reduce the tariff on kiwifruit from 45% to zero in five annual steps from 2015 to 2020.

Another core strategy for Zespri is the development of northern hemisphere grown supplies of Zespri branded kiwifruit grown to Zespri’s standards. By maintaining shelf space with Zespri branded fruit year round in the main markets the goal is for the Zespri brand to be kept top of mind when consumers think about kiwifruit.

During 2014 13.2 million trays or 47,500 MT was grown for Zespri in Italy mainly and some in South Korea. Zespri is now planning on licensing growers in California and in China to also grow chiefly Gold kiwifruit. By 2020, Zespri hopes to source 31 million trays (111,600MT) from the northern hemisphere each year.