With its greater temperature tolerance, SunGold kiwifruit offers dairy farmers in a wide range of regions the opportunity of a valuable diversification. Sheryl Brown reports.
Dairy farmers who convert a few of their paddocks into a kiwifruit orchard could be getting a phenomenal return on their land, Preston Rowe Paterson registered valuer Dylan Barrett says.
Most of the traditional kiwifruit land in Te Puke and Katikati has been taken up and the industry is broadening its reach. Kiwifruit is spreading out to more provincial areas in the North Island, including Gisborne, Hawke’s Bay, South Auckland, Kerikeri and even the Waikato.
Dairy farmers in those regions have an opportunity to grow excellent crops if the orchards are managed well, Dylan says.
The new gold variety G3, known as SunGold, is a very floral variety that is not as reliant on winter chilling, With the use of Hi-Cane, the SunGold produces a lot of flowers and appears to pollinate relatively easily in comparison to other varieties.
“In Gisborne, for example, temperatures can be more volatile, which through pollination you can’t afford, but G3 still seems to pollinate well and people are achieving some excellent results under good management.”
Some of the factors you need to consider when developing a kiwifruit orchard are the underlying soil conditions, water requirements, exposure to wind and access to labour resources, he says.
Conversion costs
The price to establish a G3 orchard is typically about $400,000-$450,000/ha including the licence fee, Dylan says.
The median cost for a G3 licence last year was $265,108/ha +GST, with the minimum accepted price at $233,333/ha +gst.
The biggest variables in the conversion costs are shelter requirements and the cost of water supply.
“From my perspective, if you own land, a Gold3 development is far more attractive than say Hayward Green. A G3 orchard will be fully producing within four to five years and the returns as well as the asset value appreciation can be phenomenal.”
The returns for SunGold growers now are about $10/tray, with an established orchard capable of yielding in excess of 15,000 trays/ha. Good growers can produce up to 18,000, or 20,000 trays/ha in some areas.
For dairy farmers with suitable land to convert to kiwifruit, it’s a better investment to develop an orchard from the ground up, rather than trying to purchase an established orchard where values are exceptionally high, he says.
An established G3 orchard is now typically worth more than $1 million per hectare, and the longer-term returns could be marginal on that investment. A quality green orchard is worth about $450,000-$500,000/cha but add on the cost to convert to SunGold, you could be better off buying an established G3 orchard he says.
When budgeting on kiwifruit developments, he usually advises working it out on 15,000 trays/ha at $8.50/tray.
Operating costs are typically about $45,000/ha including harvest, however cost escalation should be taken into consideration with rising labour costs.
Zespri is set to release 700ha of licence every year for the next four years, which will increase supply.
With more supply coming on board in the coming years, Gold3 returns are generally expected to soften back to $8.50-$9/tray over the longer term, Dylan says.
Zespri released 700ha last year, and about 50% was thought to have gone to established kiwifruit orchards, with green orchards converting to G3.
However, this year the licences are likely be taken up by more new developments, Dylan believes. Large blocks of up to 50ha are being developed for kiwifruit, he says.
“I suspect more will go to new developers this year, they may be prepared to pay more (than green growers).
“The industry has changed a lot. There is more corporatisation – the active players in the market are interested in big land holdings.”
An increasing number of corporates, syndicates and Maori trusts are investing in large kiwifruit blocks, however, individual dairy farmers have just as much opportunity to buy Gold3 licence if they’re willing to pay the money, he says.
“You have equal opportunity to secure a licence. If you’re a dairy farmer sitting on the land and you want 10ha of licence, there should be no issue if you tender at the right price.”
