Simon Limmer Beyond recovery: Growth, value and innovation in the kiwifruit industry
AGENDA 1. An overview of our industry 2. Strategy: growing demand and increasing supply 3. The recovery from Psa 4. Challenges ahead
Northland 1% 2,435 growers 12,578 hectares Waikato 3% Nelson 3% Auckland 4% Bay of Plenty 86% Gisborne 1% Hawke s Bay 1% Southern North Island 1% Industry stats Hayward distribution
Ave age: 53% of growers are over 60 years old Size of orchards 0 2 ha 791 2 5 ha 1,508 5-10 ha 589 >10 ha 161 Average orchard size: Green 3.5ha; Gold 2.6 ha Grower demographics
All Varieties Japan China Spain Taiwan Germany France Italy South Korea Netherlands North America Belgium Hong Kong 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 Sales Volume (TE) By Market 2016
80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 OGR per hectare (total)
NZKGI Zespri Board Industry Advisory Council Industry structure
Competitive disadvantages Distance to Market Land costs Labour costs Exchange rate Scale constraints Capital constraints Population density Infrastructure Domestic market
0.70 0.60 0.50 USD/KG 0.40 0.30 0.20 0.10 Chile Cost of production NZ Cost of production * NZ based on USD/NZD effective rate - 2004 2005 2006 2007 2008 2009 2010 2011 2012F Season Hayward cost of production NZ vs Chile.
Competing in a crowded marketplace
AGENDA 1. An overview of our industry 2. Strategy: growing demand and increasing supply 3. The recovery from Psa 4. Challenges ahead
Zespri was created to deliver strong, sustainable returns to our growers and shareholders. Zespri s purpose
Developing and marketing the world s leading portfolio of kiwifruit products for 12 months of the year. Zespri s strategy
The Zespri System
The Zespri System The Zespri System is the knowledge, policies and processes that embody the Zespri brand throughout the entire supply chain and consistently allows us to live up to our consumer promise.
A premium branded product Investing over $150m a year in global marketing Top 5 fruit brand in 15 Markets Created New Segment A growing international sales and marketing team
Innovation from soil to spoon. Sustainable delivery of fruit - 10% Sustainable production - 21% Health and consumer research - 11% New cultivar development - 58% Over $20m Zespri investment per year in : Production systems Crop protection Consumer research New cultivar development
1 2 3 4 Female Seedlings 100,000 Female Seedlings Clonal Trials 9230 New Cultivars Block Trials 1 Red 1 Green 9 Males Commercial Product Zespri SunGold Zespri Sweet Green World s Largest Kiwifruit Breeding Programme
Volume (mte s) 250 200 We are here 207m 150 100 50 PSA IMPACT & RECOVERY Gold9 Future New Varieties Gold3 Green14 Hort16A Hayward - Forecast Supply Volumes To 2025
Gold3 licensing First licenced in 2010 Provided to Hort16a growers as a Gold One For One licence or at a fixed price A pathway out of Psa. 60% of growers now have 2 varieties New licence release programme in 2016 2,000 ha over 4 years Closed tender bids
Gold 3 Licence release 2017 Item All bids Northland 2 Median price (excl GST) Minimum accepted bid (excl GST) Number of successful bidders $235,000 per ha $221,000 per ha 550 Auckland 6 Waikato 2 Poverty Bay 12 Bay of Plenty 262 Ave size of successful bids 1.7ha Total ha bid for 1,277 Nelson 6 Hawke s Bay 4.2 Location Hectares Note: not all locations of bidders disclosed
Reliable Year-round Zespri Supply Retain shelf space and maintain consumer eating experience Growing the kiwifruit category as a whole Maintain Zespri brand presence Zespri Gold, SunGold, Green, Sweet Green, Organic Green Local presence and support in kiwifruit growing communities Zespri Global Supply
France Portugal Spain Italy Turkey Korea Japan China (ZGS) Production Countries
Volume (mte s) 60.00 50.00 40.00 30.00 20.00 10.00 - ZGS Green ZGS Gold (ZGS) Production Forecast To 2025
AGENDA 1. An overview of our industry 2. Strategy: growing demand and increasing supply 3. The recovery from Psa 4. Challenges ahead
Hort16A $50.5M in R&D investment, lead to ZespriGold, a $7B product
An industry under threat.
New R&D learnings Market access concerns New reports of infection Grower funding issues New on-orchard advice Customer queries Industry meetings Potential cause of infection Offers of solutions Grower support Management strategy Testing process Insurance Government support Vectors of transmission New statistics Sampling process Many uncertainties to manage.
DECISIONS AND ACTIONS Led through IAC Understanding the issue Two-way communication Aggressive action Pastoral support Request to government Growers vote yes to the aggressive management strategy November 2010.
Technology Management practices Implementing Varieties the solutions.
June 2012 - Release of 2,068 hectares of Gold3 license, a commercialised kiwifruit variety with tolerance to the disease. Innovation creates a pathway.
AGENDA 1. An overview of our industry 2. Strategy: growing demand and increasing supply 3. The recovery from Psa 4. Challenges ahead
Carbon/greenhouse gas reduction Water use efficiency Refinement of packaging materials Managing waste kiwifruit material Reduced reliance on non-renewable resources Supporting biodiversity Preserving bees and supporting bee keepers Taking care of our people and our community Sustainability and environmental impacts
More investment in kiwifruit Orchards attracting strong prices High demand for Gold3 licences What does this mean for access and participation in the industry? Orchard prices and orchard ownership
Ageing demographic Need to support pathways into the industry Need to invest in training and mentoring Industry programmes on governance and leadership, hort scholarships, careers events and schools engagement. Grower demographics and succession
Biosecurity risk has not gone away! Need for continued focus on readiness and response. Supported through: joint investment in KVH, through Government Industry Agreement and operational agreements Plus ongoing investment in innovation Biosecurity: prevention and response