Zespri signals upside for grower payments in 2020

By Gavin Evans

April 23 (BusinessDesk) - Kiwifruit marketer Zespri is forecasting a potential lift of up to 6 percent in payments to growers this season.

The firm, which markets kiwifruit on behalf of 2,500 New Zealand growers and another 1,200 in Italy, Japan, Korea and France, is expecting total fruit and service payments of $1.775 billion to $1.875 billion in the year ending March 2020.

Zespri is yet to publish its March 2019 year results but in February forecast a total payment of almost $1.77 billion for that year. That figure, which excludes loyalty payments, compares with $1.43 billion in the year ended March 2018.

Kiwifruit is New Zealand's biggest horticultural export. Export earnings reached almost $1.7 billion in the June 2017 year, a third of the sector’s total. The next largest contributors were wine at $1.54 billion and apples at $691 million, according to government data.

Zespri chair Bruce Cameron reminded growers and shareholders the forecasts are the first for the 2019-2020 season and are still subject to significant uncertainty.

In February the company forecast a net profit range of $177-180 million for the March 2019 year, up from the initial $170-175 million it estimated this time last year, and the $101.8 million net profit Zespri reported for the 2018 year.

For the March 2020 year it is forecasting net profit of $180-195 million, including increased gross revenue from the 2019 licensing of its Sungold, or Gold3, variety.

Compared with this time last year, Zespri is picking significantly better prices for growers of Green14 fruit, and slightly better prices for gold fruit and organic green fruit.

Traditional green fruit is expected to deliver growers $5.20-$6.20 a tray in the current year, against the 2018-2019 payout of $5.36 that Zespri signalled in February.

Organic green fruit may achieve $8-$9 a tray, against the $8.88 signalled for 2019; gold fruit may bring in $9.70-$10.70 a tray, against the $10.80 signalled for 2019; and Green14 fruit may bring in $7-$8.50 a tray, against the $7.21 signalled in February for the year just ended.

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