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Apple production may offset fall in returns


17 December 2003


Increased apple production may offset fall in export returns


Returns to apple growers are expected to fall in 2003/04 for the second successive year but then gradually rise over the medium term as the New Zealand dollar depreciates, according to the latest MAF Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) report.

However the SONZAF report says this fall in export carton returns could be offset this year by increased production.

The report says that despite improved market prices in the past three years, grower returns for the year ended September 2003 fell because of the higher value of the New Zealand dollar.

Apple growers received an estimated $12.60 per export carton at the orchard gate. This was down 12 percent on the previous season.

Severe spring frosts in Hawkes Bay and hail in Nelson along with cooler drier conditions in the country reduced the total production of apples by six percent compared to the previous year.

Despite this, total apple exports increased marginally to 17.9-million cartons. This resulted in a reduction of apples for juice and some processors struggled to source apples.

Looking to the current season, there are encouraging signs that the apple harvest season will be good.

In recent years there has been a big drop in the number of apple growers in the country - down from around 1500 to fewer than 900.

However, New Zealand's apple production is forecast to continue to increase in future due to orchard expansion, new development and increased production.

The report says New Zealand's apple export volumes for the 2003/04 season are forecast to increase by seven percent to 19.2-million cartons. Further on, provided that there are no long-term adverse climatic events, export volumes are due to steadily increase to 19.6-million cartons by 2006/07.

Since the industry was deregulated in 2001, the number apple exporters have increased to 97. Thirty-five exporters were responsible for 95 percent of exports, with ENZA alone exporting 41 percent of the total export volume last year.

This fragmentation of the export market is leading to concerns about "weak selling", to the benefit of big overseas retailers. There have also been suggestions that the industry could benefit from more co-operation, particularly in "common-good" areas such as crop estimation and price forecasting.

A MAF review of the effect of industry reforms is due to be completed early next year.

In the longer term, the report says that the New Zealand pipfruit industry is at a cross roads.

It says there is a danger that relaxed grade standards, combined with an increased world supply of Braeburn and Royal Gala apples, and the large number of New Zealand exporters, could erode the premiums that New Zealand currently receives for its apples.

ENDS


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