Kiwifruit Packing Agreement 2018 Trevelyan s

Transcription

1 Kiwifruit Packing Agreement 2018 Trevelyan s

2 Trevelyan s Packing Agreement

3 CONTENTS 2017 Performance Results 2 Work Smart 2018 Trevelyan s Packing Terms 3 Respect our People 2018 Industry Structure 8 Getting to Know Us Packing Commitment Form (loose leaf) As we roll in to the start of the 2018 harvest it is interesting to reflect on the past year and what lies ahead for our industry. In 2017, Hayward was characterised with a lower average yield of 9,500 trays/ha following two record years. Shipping movement was early. With all markets selling the fruit through quickly, inventory management teams were able to optimise which fruit to send. This year Hayward volumes are higher, which means shipping will be later and will potentially provide challenges for inventory management. Turning to SunGold, 2017 produced warmer conditions and a later harvest. The fruit was harvested at a more mature level to avoid storage breakdown disorder issues. This year sees another large increase in volume and our thoughts are on managing this fruit in a tight packing timeframe. It is pleasing to see that Zespri listened to concerns re SunGold time rates which were not sufficient to counter the risk of storing later. These have been stepped up from week 30 for this coming coolstore season. While we believe this can go further, it is nonetheless a positive step forward. We introduced NIR grading technology on pack line four. It was a steep learning curve to understand how best to handle the low dry matter SunGold. Issues we faced were around setting thresholds that would provide a positive outcome with the least risk for growers, as well as how best to charge where costs lay. It is apparent that NIR is not a long-term solution to removing low dry matter fruit the best outcome is for the industry to find ways to improve dry matter on the orchard. NIR, at best, is an ambulance at the bottom of a cliff. There is a significant cost to operating NIR so we have changed our charging model for this season to make sure the costs are more equitably distributed towards those who receive the benefit. It is pleasing to see our Supplier Accountability results for Hayward conventional looks like it will contribute over 35 cents/tray across all pool trays for Trevelyan s growers that is an outstanding result. Quality of out-turn in the market is critical to the success of our industry, and we strongly support the linking of fruit quality to premiums/ penalties upon arrival in market as it ensures suppliers are managing fruit to the best of its potential. James has been involved with MPI in Wellington during the past 12 months to help them put more substance around one of their strategic plan areas before it is rolled out in The vision is that all 4.7 million New Zealanders become biosecurity risk managers. It is encouraging to see that the public are becoming more engaged with border security discussion, with finds of Brown Marmorated Stink Bug being reported in the media. Last year saw the departure of Lain Jager as Zespri CEO, with Dan Mathieson replacing him in this critical role. The timing of Dan taking over the helm was closely linked to the announcement of increased SunGold licence release over the next 5 years. While the industry is in a strong place currently, we must exercise caution and make sure we don t race to a position of oversupply. At the same time Zespri has signalled they don t want Hayward volume to drop, which appears to run counter to the current situation of growers mainly cutting over Hayward to SunGold. A very real focus for us has been how best to manage the increasing volumes of SunGold within a compressed optimum harvest window. We have set up a dehumidity tent structure along pack line two that will enable us to trial labelling SunGold out of short term bin storage. The results of this 1000 bin trial will give us an understanding of what opportunities we have to manage fruit through the capacity pressure weeks of harvest. Packing rates are detailed on page 3 of this agreement. Minimum wage and packaging cost increases have a significant impact on our pricing. We have aimed to keep these increases to a minimum. An important comment for the future is that the current government has signalled an intention to move the minimum wage to $20/hour over the next 3 years. This, combined with ever increasing costs of compliance and the constant capital investment required, will see prices rise over the next few years. As always, we will focus on where we can innovate and find ways to improve to save money for our growers. Thank you so much for entrusting Trevelyan s with your fruit. We look forward to seeing you over the harvest period. If there is anything you would like to discuss or need clarified in this packing agreement, please call either of us. Best wishes for a prosperous harvest. Regards, James Trevelyan Stephen Butler

4 2017 Performance Results FEBRUARY 2018 OGR FORECAST $ / TRAY 2017 CLASS 1 TRAYS EXCL. NON STANDARD SUPPLY $12 $9 $6 $3 $0 $6.54 $6.88 HWCK $8.60 $9.48 HWOB $5.47 $5.71 HECK $9.98 $10.00 GACK $10.01 $12.08 GAOB 6,173,677 HWCK 329,617 HWOB 177,180 HECK 4,983,548 GACK 288,208 GAOB 11,952,230 TOTAL Industry Trevelyan s Industry Trevelyan s FINAL FRUIT LOSS (%) FOR 2017 HARVEST 2018 CLASS 1 ESTIMATED TRAYS EXCL. NON STANDARD SUPPLY 2.16% 2.0% 1.5% 1.0% 0.5% 0% 1.29% 0.78% HWCK 1.03% 0.55% HWOB 0.87% 0.03% HECK 0.72% 0.49% GACK 0.23% GAOB 7,781,418 HWCK 351,567 HWOB 156,971 HECK 6,315,287 GACK 326,628 GAOB 14,931,871 TOTAL Industry Trevelyan s Industry Trevelyan s 2

5 2018 Packing Terms Growers will receive 1. A Packing Agreement with Trevelyan s Pack and Cool Ltd (this document) and 2. A 2018 Trevelyan Growers Ltd Agreement. This will be sent once the Zespri Supply Agreement is completed. Growers will need to sign and comply with these agreements and return them to Trevelyan s Pack and Cool Ltd. Money Flow Payment for fruit and service costs will be from Zespri to Trevelyan Growers Ltd to the grower. administration and all other agreed services of Trevelyan Growers Ltd will be made direct from Trevelyan Growers Ltd to Trevelyan s Pack and Cool Ltd, from grower returns received from Zespri. Payment of each grower s liability for logistics will be made direct from Trevelyan Growers Ltd from grower returns received from Zespri. Packing Charges (Class 1) Packing charges will be calculated by maturity area. There is no charge for Green and Gold Class 2 rejects. Payment of each grower s liability for packing, transport, cool storage, FRUIT GROUP HW HW OB G3 G14 Base Rate 0% rejects $1.28 $1.30 $1.98 $2.06 REJECT SURCHARGES 2018 CENTS PER % 0% to 5% $ % to 10% $ % + $0.03 3

6 Picking The picking system is to be controlled by Trevelyan s Pack and Cool Ltd. Fruit is to be harvested after a clearance to pick is given by Trevelyan s Pack and Cool Ltd. Trevelyan s Pack and Cool Ltd will schedule the time of picking by mutual agreement with the grower. Packing of your kiwifruit will be at Trevelyan s Pack and Cool Ltd s absolute discretion. Timing may change due to weather or other factors. Trevelyan s Pack and Cool Ltd is not liable in the event your kiwifruit is damaged as a result of hail, frost, wind, disease or any other event prior to picking or packing. Where Trevelyan s arranges the picking contractor, the cost of picking is the grower s responsibility and will be invoiced by Trevelyan s to the grower (see chart 1). A gate fee may be invoiced to the grower depending on orchard location, size of maturity area picked and the need to return to complete the harvest. To move machinery within the area from Matapihi to Otamarakau, the recommended fee is $ Outside this area a gate fee may need to be negotiated with the harvest contractor. Because of the additional hygiene requirements presented by Psa, harvest contractors may charge a recommended hygiene fee of $25.00 per unit (tractor and bin trailer). Green and Gold Picking Bonus The picking bonus for all varieties has been determined by Trevelyan Growers Ltd. This will be detailed in the 2018 Trevelyan Growers Ltd Agreement. The bonus is paid on achieving field audit criteria and packhouse assessment criteria. Hayward bonus is $3.00/bin. G3 and G14 bonus is $4.00/bin. All harvest contractors must be Zespri registered. Bin Cards Bin cards will be pre-printed with grower number, variety, growing method and maturity area. Please take care to fill in the bin cards clearly and correctly with a permanent marker pen including: the pick date the block name Transport Transport of bins to and from the orchard will be a cost to the grower and is not included in the base packing rate (see chart 2). Payment of all transport charges will be made to Trevelyan s Pack and Cool Ltd by Trevelyan Growers Ltd on behalf of the grower. Kiwistart Kiwistart will be: picked in order of clearance subject to availability and weekly allocation subject to the terms of the 2018 Zespri Supply Agreement Zespri gives only 24 hours notice when closing the Kiwistart demand cap. Therefore, some pooling of Kiwistart returns may be necessary for crops picked for Kiwistart that miss the demand cap cut off. Any equity issues will be resolved by Trevelyan Growers Ltd. Packing On receipt of fruit at the packhouse, Trevelyan s Pack and Cool Ltd will at its discretion: a. cure fruit in bins before packing or b. store fruit in bins in a conventional buffer coolstore Trevelyan s Pack and Cool Ltd will: 1. Provide skilled and capable staff in the packhouse. 2. Pack fruit to the Zespri grade standard. 3. Provide packout documentation to growers as soon as possible after packing. This report will reconcile Class 1, Class 2 and reject fruit to the total kilograms of fruit submitted. Chart 1 RECOMMENDED PICKING RATES Chart 2 TRANSPORT CHARGES Hayward Picking Rates Pergola Full Contract (Labour and all Machinery) $32.90/bin G3 and G14 Machinery Labour Hourly Rate - Labour $25.70/hour Forklift + Driver $1.75/bin + $25.70/hour Te Puke Area (Matapihi to Otamarakau) Te Puke - No 1 Road Other Areas $5.60/bin $5.10/bin as charged Tractor and Trailer + Driver $125.00/full day + $80.00/half day + $25.70/hour Contractors may negotiate a contract bin picking rate for G3 with growers if both parties are in agreement and Trevelyan s has been duly notified. Trevelyan s picking quality standards must be adhered to. 4

7 4. Pack fruit held in buffer storage as soon as possible at the completion of the harvest period. 5. Welcome growers to the packhouse to view the packing of their fruit. 6. Be BRC compliant. 7. Pack Class 2 fruit at the packhouse s discretion. 8. When packing fruit, comply with all relevant NZ laws, codes and standards. Reject Rates Hayward/G14 Reject rates are defined as: Fruit other than Class 1, size 18 to 46 count and Class 2 (kg) divided by total fruit handled (kg) G3 Reject rates are defined as: Fruit other than Class 1, size 14 to 42 count and Class 2 (kg) divided by total fruit handled (kg) Count size 42 SunGold are non standard supply. Low dry matter fruit will be charged as a reject. Low dry matter fruit that is not NIR graded will have the reject percentage for only the low dry matter fruit reduced by 50%. Reject Surcharge Where the reject surcharge applies, it applies to all Class 1 trays packed. Eg: A Hayward crop with 12% rejects will be charged: Base Rate $1.28 Surcharge 0% to 5% 5.1% to 10% 10%+ $0.05 $0.10 $0.06 Packing charge/tray $1.49 Reject surcharges will be charged at maturity level. Differential Pricing for packing is set on the charge for a base pack per variety. The pack category differential as specified in the 2018 Zespri Supply Agreement will be added to the base rate. This equalises the costs of packing different pack types. The cost of the differential charge is funded by Zespri payments. Class 2 HAYWARD Base Rate - $1.94 per tray equivalent plus differential G14, G3 Base Rate - $3.08 per tray equivalent plus differential The Class 2 rate is a fixed rate with no reject surcharge added. Packaging differential, if any, will be added. NIR Grading In 2018 Near Infra-Red (NIR) grading technology will be available in packhouse four. This technology allows us to extract some value from lines where fruit does not meet the minimum taste standard (MTS). It works by predicting the dry matter of each fruit and segregating the population into high and low groups, to enable the high population to be above the required MTS. To cover the costs of running the NIR equipment, 5 cents/tray will be charged over and above the base rate for any lines that require NIR grading. To avoid doubt, this extra charge will be applied to all Class 1 trays in the pack-run, not just the sizes that require NIR grading. The reject surcharge for low dry matter fruit will also apply. Count size 42 SunGold will not be NIR graded. 5

8 Where there are more maturity areas requiring NIR grading than capacity to pack them, preference will be given to maturity areas that have potential to recover the largest proportion of their crop estimate. Zespri GAP Compliance All growers must have a ZIL grower number and comply with ZIL standards. All growers must be GAP compliant at all times and agree to comply with the GAP PMO documented procedures, policies and, where provided, technical advice. If a grower becomes non-compliant they will go through the grower sanction process as set out by the Zespri GAP PMO quality system. The sanction procedure documentation must be filed in growers individual GAP folders for reference if required. Pests/Stains/ Punctures/Other If any crops have an attribute that requires the packhouse to operate at a significantly slower than normal rate the grower will be contacted and an hourly rate may be charged to cover Trevelyan s Pack and Cool Ltd s costs. Trevelyan s Pack and Cool Ltd retains the right to refuse to pack a particular line of fruit. Fruit Loss Packaging All reusable packaging arising out of fruit loss will be purchased by Trevelyan s Pack and Cool Ltd, at its discretion, at 75% of the new season price. Payment will be made to Trevelyan Growers Ltd. Independent Laboratory Charges Growers pay for all clearance samples requested through the independent laboratory. Samples will be charged at cost and payment for all charges will be made by Trevelyan Growers Ltd on behalf of the grower by way of deduction from grower returns. Payment Payment of packing charges pursuant to this Packing Agreement will be made direct from Trevelyan Growers Ltd to Trevelyan s Pack and Cool Ltd from returns received from Zespri which are payable to the grower. The grower irrevocably authorises and directs Trevelyan Growers Ltd to pay Trevelyan s Pack and Cool Ltd for all packing charges payable by the grower. GST All prices quoted in this packing agreement are GST exclusive. GST will be added to all payments when made. Submit Payment The responsibility for payments rests with Trevelyan Growers Ltd. As a guide, the advance payments to growers from Trevelyan Growers Ltd will be: $0.50/tray equivalent within 21 days of submit. Payments for picking, transport, packing, cool storage and logistics are required to be paid before further payments are made to the grower. Trevelyan s Pack and Cool Ltd may, at its discretion, defer some of these payments to provide cashflow to the grower. Further payments to growers will follow progress payments or as funds are received from Zespri. Orchard Reports Trevelyan s prides itself on transparency and open communication with all its growers. Our intention is to continue providing orchard reports to give growers an objective view. We hope this level of service is beneficial to you. Risk Trevelyan s Pack and Cool Ltd will not be liable for: 1. Any loss of, or damage to, the grower s fruit, except liability caused by any negligent act or omission by Trevelyan s Pack and Cool Ltd. 2. Failure to make fruit available for supply at any particular time or period except where Trevelyan s Pack & Cool Ltd is proven to have been negligent. 3. Breach of or failure to perform any of its obligations under this agreement, where such breach or failure is the result of a cause or causes beyond Trevelyan s Pack and Cool Ltd s reasonable control. 4. Trevelyan s Pack and Cool Ltd will ensure its personnel take all reasonable care when visiting a grower s orchard and when handling growers fruit to minimise the risk of Psa spreading. Where all reasonable care has been taken, Trevelyan s Pack and Cool Ltd, its agents and employees, will not be liable for any loss or damage suffered or incurred by a grower where such loss or damage is attributable to Psa. 6

9 Industry Terms Terms defined or used in the 2018 Zespri Supply Agreement have the same meaning in this agreement. The 2018 Zespri Supply Agreement will be available for viewing at Trevelyan s Pack and Cool Ltd or Zespri s website canopy.zespri.com once completed. Zespri Exclusive Supplier The grower agrees they will supply all of the grower s Class 1 kiwifruit, other than Class 1 kiwifruit sold in New Zealand, or exported from New Zealand for consumption in Australia, exclusively to Zespri Group Limited in 2018, as required by the 2018 Zespri Supply Agreement and the Enduring Funding Agreement. Trevelyan s Pack and Cool Ltd agrees with the grower that it will not knowingly contract with any other grower that does not supply all of their Class 1 kiwifruit, other than Class 1 kiwifruit sold in New Zealand, or exported from New Zealand for consumption in Australia, exclusively to Zespri Group Limited in 2018, as required by the 2018 Zespri Supply Agreement. Dispute Procedure Any disputes will be dealt with in the manner prescribed by the 2018 Trevelyan Growers Ltd Agreement for that type of dispute. To Complete The Trevelyan Packing Agreement commitment form needs to be signed and completed by the grower. A stamped, addressed envelope is included for your convenience. We at Trevelyan s would like to take the opportunity to wish you a successful and prosperous harvest. Yours sincerely James Trevelyan Managing Director Stephen Butler General 7

10 Industry Structure Contracts and Parties 1. The Packing Agreement Grower and Trevelyan s Pack and Cool Ltd Trevelyan Growers Ltd Agreement Grower and Trevelyan Growers Ltd. The grower has an agreement with Trevelyan Growers Ltd. Trevelyan Growers Ltd will act as an agent for the grower and will be governed by elected grower members each year. Trevelyan s Pack and Cool Ltd will manage Trevelyan Growers Ltd on a day-to-day basis Cool Storage Agreement Trevelyan Growers Ltd and Trevelyan s Pack and Cool Ltd Zespri Supply Agreement Trevelyan Growers Ltd and Zespri. (Option A) Trevelyan Growers Ltd (TGL) Trevelyan Growers Ltd (TGL) is the grower supply entity which receives all growers funds and is governed by elected grower members each year. TGL is the registered supplier to Zespri in the supply agreement. TGL is administered by Trevelyan s Pack and Cool Ltd. The Directors Grower/Chairman Colin Olesen Growers Simon Cook Murray Cresswell Kyle Howie Mat Johnston Terry Newlands Jeff Roderick Ian Schultz Steven Wright Lance Dodd - Associate Director Trevelyan s Pack and Cool Ltd Stephen Butler Alister Hawkey James Trevelyan ZESPRI TREVELYAN GROWERS LTD TREVELYAN S PACK AND COOL LTD GROWER In the above diagram the Registered Supplier is Trevelyan Growers Ltd. 8

11 Getting to know us James Trevelyan Managing Director Stephen Butler General Alister Hawkey Executive Director Debbie Robinson Supply John Lewitt Operations Phil Allison Technical Ash Lee Grower Liaison Cody Bent Kiwifruit Grower Liaison Marty Blake Kiwifruit Grower Liaison Neo Cairns Kiwifruit Grower Liaison Daniel Green Kiwifruit Grower Liaison David Mowlem Kiwifruit Grower Liaison Dave Parsons Kiwifruit Grower Liaison Jonathan Cutting Orchard Productivity Daniel Birnie Avocado Danni Van der Heijden Avocado Services Lance Dodd Domestic Market Christine Draffin Quality & Compliance Christine Broad Harvest Donna Atkinson Inventory Mike McCauley Coolstore Darold Krull Chief Engineer Greg Meyers Packaging & Forklift Amrit Singh EDI Jodi Johnstone Human Resource Paula Ross Financial Controller Maria Brouwers Assistant Operations Kelly Seymour Grower Payments Katharina Schmidt Health & Safety 9

12 310 No. 1 Road, R.D.2 Te Puke 3182 New Zealand Phone