$30 mln kiwifruit orchard investment
Thursday 20 April 2017 11:02 AM
Te Tumu Paeroa, Quayside Holdings plan $30 mln kiwifruit orchard investment
By Paul McBeth
April 20 (BusinessDesk) - Maori trustee Te Tumu Paeroa and Bay of Plenty Regional Council investment arm Quayside Holdings plan to spend $30 million to build 10 kiwifruit orchards on Maori land in the next year and a half.
The orchards would be the biggest investment on Maori land, spanning 90 hectares through the Bay of Plenty and Gisborne, and would then be transferred back to the original owners in 12-to-17 years once a targeted return has met, the Maori trustee said in a statement. Until then, the land would be leased and Te Tumu Paeroa would build and operate the kiwifruit businesses, taking on the financial risk.
"Our programme allows land owners to participate in developing a successful kiwifruit orchard on their land and see the ownership of the business transfer to them by 2010, creating a legacy for generations to come," Maori Trustee and Te Tumu Paeroa chief executive Jamie Tuuta said. "A core part of our programme is building the capability of land owners to successfully govern the business when it comes time to transfer ownership to them."
The move comes as Maori Development Minister Te Ururoa Flavell tries to usher through legislation aiming to improve the management and development of collectively owned Maori land, and last month he unveiled the final draft of the Te Ture Whenua Maori Bill.
Tuuta said the kiwifruit orchards will grow a mix of premium gold and traditional green kiwifruit, and by the 2030 return date should be generating annual returns of $7.1 million. Te Tumu Paeroa and Quayside will be the majority investor in the orchards, but are open to co-investment from parties interested in developing Maori land. Iwi and hapu will also have the opportunity to invest in individual orchards.
"It's difficult for Maori land owners to develop businesses on their land unless they have access to capital from other means, because many don't want to use land as security on a loan," Tuuta said. "As a result, owners usually contract out the land to businesses who do have access to capital and can reap the financial rewards for taking the entrepreneurial risk."
Te Tumu Paeroa is talking to trustees and land owners and expects to name the 10 blocks of land in a few months. It has already built two orchards in the Bay of Plenty over the past three years in a pilot project, which is managed by Southern Cross Horticulture and Opotiki Packing and Coolstorage.
Quayside and Te Tumu Paeroa have teamed up before. In 2015 they each bought a 10.1 percent stake in Opotiki Packing and Coolstorage with a view of driving economic development in the eastern Bay of Plenty.
Quayside, which owns a controlling stake in Port of Tauranga, has $200 million of perpetual preference shares listed on the NZX's debt market. The notes pay annual interest of 4.32 percent, and last traded at $96.30 per $100 face value bundle.