In tenders for another 700ha of licensed SunGold area growers have forked out an average of $265,180 a hectare, up $30,000 a hectare on last year’s sale.
Strong prices coincided with a heavily oversubscribed offering with 474 successful bids from 710 tenders.
Tauranga property valuer and orchardist Dylan Barrett said the values are a positive vote by the industry in SunGold’s future.
“But at the same time growers are conscious of the caveat around Zepri’s commitment to releasing 700ha of licence per year for the next four years. which is subject to an annual review that would consider any potential new risks to the demand outlook.”
Zespri’s plans at this stage are to release 700ha of new SunGold licences a year for five years, with this year being the first tranche after last year’s 400ha.
The marketer remains firmly upbeat about its ability to move the fruit, with volumes surging to 50 million trays last year after almost being wiped out post-Psa.
But Barrett said it will be interesting to see how the orchard market adjusts to the values and particularly what the effect might be on Green orchards.
“Good Green orchards could sell for up to $500,000 a hectare and there are people out there willing to pay but we have not seen many top quality Green blocks sell this season to put a real line under values.
“There are people willing to pay for a good Green orchard, knowing they can secure a Gold licence – you can potentially justify paying $500,000 a hectare for Green to convert over to SunGold where the net earning potential could be north of $100,000 a hectare under effective management.”
This year is the first year the licences have been opened up equally to green field and conversion or cutover from Green fruit.
Zespri grower and alliances officer David Courtney said the split between the two planting options is estimated at about 50:50, slightly more even than last year.
Courtney acknowledged Zespri could have a problem in future over Green supply if it continues to lose land to SunGold.
“We are not there yet and ultimately what will slow it down is the economics of Green returns.
“Some growers at the top end are able to make $100,000 a hectare on Green against an average of about $60,000 so it is worth their while to keep at it.”
The combination of SunGold’s high yields (15,000 or more trays a hectare) and high returns is a strong drawcard to growers, despite the high entry cost of the licence fee.
Barrett said the pressure on Green supply will also serve to keep some pressure on Green orchard prices, despite SunGold being such a popular option.
“But SunGold’s high cropping volume and its sheer consistency compared to Green, which can tend to be a bit up and down, makes it a great crop to budget on and if you are in it for the long term then converting does make sense.”
Bayleys Te Puke real estate agent Snow Williams said his greatest challenge is a shortage of quality orchard listings, with no shortage of buyers looking.
“And they tend to be people from within the industry who know it well and see the future earnings to come out of it realistically.
“Buyers are now looking very favourably on Green as SunGold values get up there.”
He recently sold a 4.9 canopy hectare SunGold orchard for $5 million and Green orchards are averaging about $450,000 a hectare.
Williams expects a result very soon on the sale of the country’s largest privately owned kiwifruit orchard, a 98 canopy hectare property near Te Puke with the potential to generate 1.3 million trays when all vines are at full maturity.
Courtney said the marketer is finding SunGold remains a fantastic fruit to sell.
“We do know that we need to be cognisant that at some time the demand may slow down and of the issues that exist around the labour squeeze at this time of year.
“There is also a need there for greater processing capacity. The opportunity is there but the industry will be working together to address it.”
