EastPack seeks Waikato kiwifruit suppliers

ANDREA FOX
Last updated 12:24 23/01/2013

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EastPack, one of the strongest performing kiwifruit post harvest operators to emerge from the industry havoc caused by vine killer Psa-V, is on the hunt for more Waikato suppliers as it forecasts a profit and a steady grower dividend payout this year.

The cooperative, New Zealand's biggest grower-owned post harvest operator, is forecasting a $6.2 million profit before tax after paying a 20c per tray rebate in June last year, and says it should maintain investor share dividends at 15c per share, while aiming to halve debt to $5 million for the 2012 year end. 

EastPack chairman Ray Sharp said the company anticipates its average 2012 orchard gate return to for green growers to increase 17c per tray to $4.68 per tray, one of the highest returns in the industry and above marketer Zespri's average of $4.33 per tray.

Chief executive Tony Hawken said the company was expecting to handle around 400,000 trays of fruit from the Waikato this April harvest, and it wants more suppliers from the region which had shown ''excellent'' performance in gold fruit production.

The previously highly lucrative export Zespri gold variety Hort 16A has been almost wiped out by Psa-V, which was discovered in the kiwifruit growing capital Bay of Plenty two years ago. Export volumes are expected to be down by 10 million trays this year as a result.

Hawken said EastPack had about eight Waikato suppliers. The region has 131 registered kiwifruit orchards, about 4 per cent of the country's total kiwifruit hectares and before Psa was discovered near Te Awamutu last year,  contributed 3 per cent of all gold fruit production.

EastPack's supply competition in the region is Seeka, a listed company and the sector's biggest operator, and the Satara and Apata companies.

For many Waikato gold fruit growers this year's harvest will be their last for two or more years until new grafts of hopefully Psa-V resistant gold vines become productive.

Big Ohaupo grower Richard Glenn hopes that post-Psa blight, the west side of the Waikato could become a more important kiwifruit growing area for the $1.6 billion export industry because he said it had less rainfall than the Bay of Plenty. Rain has proved a friend to Psa-V, thought to be a biosecurity breach from China.

Hawken said while he was not an expert on Waikato's micro-climates, Glenn was a respected and experienced grower and if he believed the region's climate was conducive to more kiwifruit production, he was no doubt right.

EastPack's forecast 2012 before tax profit was below last year's $10.1m partly because the company had reduced its post-harvest charges to growers by $2.5m to ease the Psa-V fruit loss impact.

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However it had achieved the 2012 forecast profit on greatly reduced gold fruit volumes. Hawken said EastPack's expecting to handle 18-19 million trays of kiwifruit this harvest, a similar volume to last year's but with the gold component shrunk to 15 per cent from 35 per cent last year. New green supply would make up the difference.

EastPack had achieved a 10c reduction per try in operating costs without staff cuts. It had acquired 2.3 million trays from first time suppliers to replace lost gold trays, and had reduced packing prices by 20c per tray while maintaining profitability and reducing fruit loss to very low levels.

EastPack sells all its class one fruit to Zespri, and 95 per cent of its class 2 fruit goes to Australia, Hawken said.
EastPack subsidiary Southern Produce handles transtasman sales, and EastPack also exports to Australia under its own brand.

Hawken had ''no comment'' on criticism by Tom Wilson, outgoing chief executive of Satara, that Zespri's brokerage fees are too high.

He said EastPack was working closely with Zespri to improve supply chain efficiencies and ''put more money in growers' pockets''. 

- © Fairfax NZ News

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