Wet weather and cold temperatures mean this year’s cherry crop will be lighter.
However, Summerfruit New Zealand chairman Tim Jones said recent better weather and strong prices are offsetting the smaller volume.
“The fruit that we have picked in the last few days is really good quality and we are getting much better volumes. The prices are really good at the moment. That makes up a little bit for some of the lack of volume,” Jones, who is also chief executive of 45 South, NZ’s biggest grower and packer of export cherries, said.
The Chinese New Year begining on January 25 and running to February 8 is crucial as NZ cherries earn a hefty premium over any competitor, such as produce from Chile.
“Chile is sending a huge volume of cherries but we, because of our fruit size and quality, command prices that are between two and three times more,” Jones said.
Exporters are paying US$18 to US$28 a kilogram for NZ cherries. The cost to grow, pick and pack cherries can range from NZ$7 to NZ$10/kg and this year is likely closer to NZ$10/kg because of the lower volumes and quality, he said.
Freight costs more than $5 a kilo.
The return can be good with the margin for a grower of $8 to $10/kg but it’s not quite enough to make up for the low volume.
The main competitor is Chile, which expects to export 180,000 tonnes to China this season. NZ’s total cherry exports were about 4935 tonnes last season.
“Ours is a fresh product with size and quality that is geared to be given as a gift generally,” Jones said.
“Theirs is more of a mass-market product that is probably more than four weeks old by the time it gets to the consumer.”
While Chile needs only a small percentage of its crop in the premium space to start affecting NZ more than 90% of its fruit still goes by sea.
“Ours is shipped by air transport and is in the market 48 hours after it is picked.”
Chilean exporters use air shipments early in the season but the bulk of the crop goes by sea.
Another advantage for NZ growers is the number of tourists coming from Asia, which makes it possible to ship freight back to China and Taiwan using the planes they are returning on.
“They don’t have those logistics available to them. If they want to use air freight they have to charter a plane and that basically is twice the price for your freight,” he said.
“What we really need to do is differentiate ourselves from them and play in a different part of the market. We have to understand our part of the market just as much as we need to understand theirs.”
MyFarm Investments research head Con Williams agrees Chile is a potential threat.
“The expansion of Chilean exports, with increasing volumes being produced in the lucrative Chinese New Year window and incremental improvements in quality, needs to be watched closely for its impact on NZ’s market position,” he said.
However, the consistent high quality, NZ brand and value-add formats employed by NZ exporters result in our cherries getting a significantly higher price.
“Demand for this type of product during the festive season is virtually insatiable.”
Jones said there is room for NZ to grow more cherries but subject to the quality the market demands.
The availability of experienced growers, casual pickers and packers and accommodation for permanent and casual staff are among considerations that need to be front and centre of people’s minds if they are thinking about growing cherries, Jones said. – BusinessDesk
