New Zealand kiwifruit production - particularly gold kiwifruit - has been rocked by the bacterial disease PSA.
The sobering news for the world's number two kiwifruit producer after Italy is coming into sharper focus as I reviewed two recent articles on the subject. One, from the New Zealand Ministry of Agriculture and Forestry and dated Dec. 14, said this about the devastating course of the bacterial disease:
The outlook for New Zealand’s kiwifruit sector and the impact of the bacterial disease Pseudomonas syringae pv. actinidiae has clarified since the release of the annual Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) report in June.
MAF has released a half-year update which shows loss of vines since the virulent strain stuck in November 2010 could take production of Gold kiwifruit from 30 million trays in 2011 to 20 or even 10 million trays in the 2012 season.
Psa has hit hardest around Te Puke in the Bay of Plenty where 41 percent of the total planted area is located. At this stage, just over a quarter of kiwifruit orchards in New Zealand are known to have the bacterium present.
Overall, up to 20 percent of Gold kiwifruit in Te Puke could still be harvested, and up to 80 percent in the wider Bay of Plenty. This would yield an export volume of around 16 million trays of Gold kiwifruit.
Psa has been slower to affect Green kiwifruit orchards, but orchard infection numbers have ramped up during the 2011 spring. The impact of Psa on green orchards in the medium term remains uncertain.
Overall, export volumes are expected to fall 21 percent to 89 million trays, and export returns are expected to fall 18 percent to $862 million, for the year ending 31 March 2013.
TK: Drawing from New Zealand MAF report, the USDA FAS released an extensive report about the New Zealand kiwifruit outlook, particularly the dark news about gold kiwifruit:
This is a direct result of the production problems associated with the Psa(v) outbreak which will see up to 50% of the older Gold Kiwifruit variety (Hort16a) perish after contracting the disease in the 2010/2011 growing season. Total Production of kiwifruit in 2012 is likely to be down 21% and is estimated at 343,300 tons.
The success of the sector over the last 10 years initially began with the total control of flow of fruit on to world markets (excluding Australia) by Zespri on behalf the growers. After a shaky start due to fruit loss problems, Gold Kiwifruit has been a raging success for Zespri and the growers who purchased licenses to grow the limited supply variety. Nowhere is this more evident than with exports to Japan. In 2010 Japan took 17% of the total volume but returned 31% of the total value of all exports of kiwifruit.
The volume of kiwifruit was kept at between 55,000 to 59,000 tons from 2004 to 2009, and only in 2010 did the volume rise to 61,000 tons. Now with Psa(v) ravaging the Gold crop, Zespri may find marketing Green Kiwifruit more difficult than ever to maintain the price premiums it has enjoyed in the past even though the crop will be smaller. The prognosis for the industry is not encouraging over the next 2 to 3 years with the effects of Psa(v) likely to further reduce the export volume in 2013 and perhaps even in 2014.
There will be rationalization in the post-harvest sector over the next 2 years. However a serious, well funded and coordinated response to the incursion is being mounted. In the long run plant breeding is likely to be the key to living with the disease. Already more tolerant cultivars are being identified and it is likely that replanting/grafting over to one or two of these cultivars will start in 2012.
TK: To say the prognosis is not encouraging is an understatement. Italy has been hurt by PSA, and Chile also has found the disease but the extent of the potential damage there is much less clear. How did the disease come to New Zealand? Pollen imports are suspected. The USDA report is essential reading for all kiwifruit traders, who are being told that New Zealand kiwi exports will decline for the next two to three years. About the impact on the post harvest sector, USDA FAS reported:
The significant reduction to production is going to last for several years and will force some rationalization in the post harvest sector. Already two of the largest packing and coolstorage operators have completed merger negotiations which are waiting on shareholder ratification. It is likely there will be across the board discounting on packing charges in 2012 as packhouses scramble for throughput.
As a result there will be some closures and mergers as the sector re-aligns itself. Zespri itself will rationalize its workforce on and off shore to align its costs with the new reality. In terms of marketing, while having less crop should make it easier to sell, the Green crop will only be reduced by 5% perhaps 10% at most and it is by far, more difficult to sell and maintain pricing at a premium to other exporters/producers of kiwifruit.
In the last few years Gold kiwifruit has been used to sell Green by allowing purchasers access to gold if they take a quantity of green as well. This will be very much more difficult to achieve with so much less Gold being available. It is hoped the new Green/Gold hybrid variety which is sweeter tasting will meet approval in Asia especially and substitute for Gold in the short term and lower paying Green in the longer term.
TK: New challenges, with less premium gold to leverage green sales, and less fruit overall. For a global perspective on trade flow for kiwi and other commodities, find the FAO Trade Flow Map. Based on 2009 stats, the U.S. received only about 5% of the volume of NZ kiwi exports and 2.7% of the value. Japan, with the strength of gold kiwi, took 12% of volume and 18% of value of NZ kiwi exports.
Off topic, but how does Zespri continue to operate with supply management and a single export marketing desk in their DNA? It's remarkable that the single desk model still exists.
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