Rural Insight -
Maturing production and sound Orchard Gate Returns (OGR) have built confidence in the market, with strong performance of G3 SunGold Kiwifruit over the 2018-2021 seasons. Fruit quality and pack-out yields have impacted returns this past season.
Buyer interest remains from syndicates, corporates, and existing operators together with an increase in buyers from non-horticulture backgrounds. Ability to outsource operations provides a reasonably passive income stream.
Without stating the obvious, those with (long-term) water access are the winners. Managing expiring consents and the “use it or lose it” approach by regional councils is often critical to preserving the production and value of orchard land.
While horticulture remains one of the higher returning rural sectors, the hangover of supply chain disruptions and labour shortages experienced this past season, along with rising operating costs on-orchard, are expected to squeeze margins.
Prices for kiwifruit orchards are expected to soften after several year-on-year gains. Sale processes are generally taking longer as buyers undertake more due diligence and time to understand seasonal conditions. Price expectations amongst buyers have softened relative to early 2022, however, prices remain elevated compared to pre-pandemic levels.
The cyclical nature of commodities has impacted avocado OGR. With the industry developing further access to the Asian marketplace and this provides buying opportunities.