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Zespri lifts returns to growers but PSA hits profits

Tuesday 24th May 2011

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Zespri lifted total returns to growers 4% from a year earlier to $883.3 million in 2010/11, but is warning of a tough 24 to 48 months as the industry learns to live with disease Psa.

Expenditure of $12.9 million on the response to Psa was a key factor in a fall in the horticulture marketing company's net profit to $7.3 million from $25.9 million a year earlier.

Zespri said another factor was an increase in the loyalty payment to growers to 25c per tray from 15c.

Average orchard gate returns per hectare had risen 7% to $41,830. That was made up of a 9% rise in green kiwifruit to $32,234, a 5% fall in green organic fruit to $37,541, and a 1% rise in gold fruit to $83,785.

Global kiwifruit sales lifted 1% to $1.51 billion, although the number of trays sold slipped 1% to 106.8m. The number of New Zealand-grown trays was down to 98.1m from 98.5m, with green trays down to 69.9m from 71.9m, green organic unchanged at 3.3m, and gold trays down to 21.1m from 22m.

Zespri chairman John Loughlin said the results were particularly pleasing considering the challenges facing kiwifruit growers.

The environment in 2010/11 had been tough, with a stuttering economic recovery, rising oil prices, seasonal challenges, the impact of Psa on Zespri's orchards in Italy, and the confirmation of Psa in this country.

"The increased return to green kiwifruit growers was a highlight because average orchard yields were down by 4%, freight costs due to rising oil prices were up 5% and the New Zealand dollar strengthened through the year," Loughlin said.

The industry was benefiting from strong growth in Asian markets.

Beyond the 2011 season, the future of the kiwifruit industry in the short to medium term was uncertain, with the impact of Psa yet to be determined, Loughlin said.

This financial year Zespri would contribute around $2.6 million toward an almost $3.5 million multi-agency investment programme in Psa research and development.

"We have a tough 24 to 48 months ahead of us as we learn how to live with and manage Psa. However, I'm confident the industry will overcome Psa and meet its long-term growth plan to triple export earnings from $1 billion today, to $3 billion by 2025," Loughlin said.

Indicative returns for 2011/12 were expected to be slightly lower than for 2010/11.

A 9% increase in the volume of green organic kiwifruit and a 28% rise in gold fruit would put pressure on average market returns, as more fruit would go into lower returning markets than in previous years.



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