So far this year more than 150 hectares of bare land changed hands for orchard development, with prices rising between 25% and 30% over the last two years.
PGG Wrightson Cromwell real estate manageer Neil Bulling said local enthusiasm for the crop shows no sign of abating, despite a tough 2017-18 summer.
“This summer was the hottest on record, bringing the harvest forward, putting pressure on packhouses and resulting in smaller, softer fruit.
“That said, for the past few years plenty of people have been keen to grow cherries and one challenging season has not dampened that enthusiasm.
“Existing, developed orchards find willing buyers at values above $500,000 per hectare.
“However, owners are reluctant to sell so sales of orchards are rare.
“Those looking to invest in cherries buy bare land instead with suitable blocks selling at around $100,000 per hectare.
“These are typically Cromwell lifestyle properties around eight hectares subdivided from farmland for the past 10 to 15 years and generally not developed in the interim.
“If they have a good water supply these blocks are ideal for cherries,” he said.
But establishing a cherry orchard requires care.
“Once you have the land and sufficient water available you then need to acquire the trees.
“That is not straightforward with the nurseries flat out and struggling to grow the trees new growers need.
“To obtain the right cherry varieties, which have a royalty on them, there is a four-year waiting list and anyone starting now will not have an orchard planted before 2021.
“After that it takes four years before your trees are producing fully.
“In the meantime, further irrigation and netting development is required, generally done in stages, making cashflow more manageable,” he said.
A mix of existing local growers and newcomers entering the market are driving Cromwell’s cherry development.
“Going into cherries takes more than just putting in your trees.
“You should talk to a packhouse as well and put all the arrangements in place for picking, packing and export.
“With so much new development coming on, new orchardists cannot take it for granted that the industry can handle everything.
“Just planting a block is not enough.
“You need all the right arrangements in place well in advance for what happens from there,” he said.
Once a new orchard reaches that point, however, the rewards repay the initial effort.
“If you might spend $100,000 per hectare to purchase the bare land you need to budget another $120,000 per hectare to develop the orchard, in stages.
“Then, once you are producing cherries, an average orchard might net $50,000 per hectare per annum while those that are more productive will make $70,000 to $80,000.
“That justifies the $500,000 per hectare value you would expect to pay for a producing cherry orchard.
“Although cherry growers suffered the same shortage of pickers this year as those growing other crops in the rest of the country, cherries are an attractive option, particularly with their short season, with harvest all over in just four weeks,” Bulling said.
