John Lewitt
Head of Operations & Logistics

Second quarter update

Our last day of export packing for the 2024 season was the 6th of June. While this seems like an early finish, it was only four days earlier than in 2023.

We still have three CA (Controlled Atmosphere) rooms to pack out of the seven rooms we initially loaded, and we have completed packing all our fruit for this season including all Bin Store volume.

As you can see in the table below, once we have completed our CA packing, we will have packed 19.5m tray equivalents in total; this is a 33% increase on our 2023 volumes and is also a 13% increase on our 2022 volumes.

This season, I observed that fruit quality arriving on site was generally in good condition for both SunGold and Hayward. The major improvement was a significant reduction in explosive soft fruit found at packing time.

• In 2023 there were five times more explosive fruit per bin for SunGold, compared with the 2024 season.
• In the Hayward variety the difference was even more dramatic, with seven times more explosive fruit per bin in 2023 compared with the 2024 season.

Staffing levels were very stable, and all shifts remained full for the entire packing season; a vast improvement over previous seasons when we continually struggled to fill our shifts.

Our attention now pivots to the shipping season. The remaining fruit will be managed effectively in our coolstores, ensuring we have good quality fruit for all markets, for the duration of the shipping season. This is additionally important as Zespri plan to have most fruit shipped by the middle of October. We have currently shipped approximately 50% of our Hayward and 60% of our SunGold fruit inventory; leaving us with four months to ship the remaining fruit. The next couple of months will remain busy for our Condition Checking, Repacking, Order Preparation and Loadouts teams.

Amy Willoughby
Business Development Manager

The business of kiwifruit

Kiwifruit is still one of the most profitable investments that I am aware of, although it is deemed high-risk as our crops are harvested once a year; unlike industries such as dairy farming, where milk is produced over several months.

The latest SunGold kiwifruit licence round was a surprise outcome for most. The primary question that has been asked is, “How does this affect my orchard value?”. Personally, I don’t believe this reduction in Gold licence price will affect values due to the strong returns that are being generated on-orchard. Time will tell, but in the meantime, we have had a good year. With excellent weather, kiwifruit was able to be picked in the optimum window, with good yields.

Zespri are maintaining a high price point despite some issues at the port; from their 2024/25 Indicative June OGR Forecast the indicative average return for Conventional SunGold is expected to be $10.625/tray and $152k per hectare. Assuming orchard costs, including harvest, range from $60-80k/ha, that leaves about $82k/ha for principal and interest, drawings and tax.

It is difficult to value orchards at the moment due to the lack of arm’s length transactions. At the time of writing, a good gold orchard is anecdotally valued at around $1,300k/ha, excluding crop. The return will heavily depend on how much debt the orchard is carrying, but from the above assumptions, EBIT ($82k/$1,300k) is 6.3%, which is a reasonable return. However, these are averages that are being referred to and if you/your orchard manager focuses on the details and increases the potential of every square metre of orchard, that is the cream that increases profitability to your pocket.

Green orchards can be profitable. Again, every vine from every available area of the orchard needs to be looked after to ensure maximum production and taste are achieved. This season has seen some phenomenal Conventional Green results, with one of the most outstanding being 17,000 trays/ha at 0.91 TZG (Taste Zespri Grade). The Conventional Green average for Trevelyan’s was around 12,000 trays/ha, and the Zespri average for Green TZG was 0.70. The key to high production is ensuring that your vines are capable of holding that level of fruit, as it is not a pleasant scenario when fruit does not meet minimum taste standards. $7.00 – $8.50/tray is the 2024/25 Indicative OGR from the June Forecast.

Growers and investors are actively looking to purchase kiwifruit orchards. We suspect some orchards will be coming to market as, after a couple of tougher years, this year seems to hold some relief and a positive note to be selling on. On the flip side, having good management in place allows owners to be away from the orchard and still gain a good return, which can decrease the willingness to sell. This makes it tough for people to enter the kiwifruit industry and may be one reason we’re currently experiencing a lack of orchards on the market. Syndication can be a good way to enter the industry. Alternatively, if you are a grower looking to exit, consider how you can help someone into the industry. Is leasing a viable option rather than syndication? Food for thought.

Whatever your situation, to keep kiwifruit as the premium product it is, we need to maintain focus on what we can control, which is the on-orchard maximisation and quality.

Disclaimer: These metrics are current as at 01/07/2024. The opinions expressed here belong solely to Amy, do not necessarily reflect the views of Trevelyan’s Pack and Cool Ltd and should not be interpreted as investment advice.

Daniel Birnie
Head of Avocado

 Considerations for the coming avocado season

I write this in late June, as the local market has come off some great returns in late autumn (circa $1500/bin) and dropped to $500/bin in early winter. With the promise of a strong export return this season, we hope the local market strengthens from here. 

Considerations for growers when deciding what to do with their fruit this season include:

• How heavy is my crop load?
• How many picks will I need to do?
• Will I pick the fruit myself or use a contractor?
• Can my orchard/trees hold fruit late? How late?
• Should my fruit go to export or local market?
• What marketer should I use?

I ask our Avocado Grower Services team to give Trevelyan’s Growers as much information as possible and then let growers make the decision, but if I could ask our Trevelyan’s Growers to provide that information to us as early as possible, then we can pass the information onto the marketers, and also our GAP team in good time.

The recent Rabobank report on avocados made for an interesting read. The three main takeaways I had were:

• The need for consolidation of supply in the face of increasing competition, margin pressures, and year-round supply. I wonder if NZ exporters will consolidate?
• The Compound Annual Growth Rate (CAGR) in Asia (excluding Japan and Singapore) has been in double digits over the last decade. In China, it is 31%. This shows that there are plenty of opportunities in these markets, especially as they have a low per capita consumption, currently.
• In the US, their monthly imports are lowest during the June – October period. I know our exporters are planning to go there this season, let’s hope we can get the fruit there in a timely manner and with good quality.

At Trevelyan’s, we aim to pick our growers’ fruit in a timely manner, pack it with diligence, and get returns that growers are satisfied with so that they continue to invest in their avocado orchards. We are keenly aware that the success of our growers’ orchards keeps us in business, so we need everyone in the supply chain to be profitable. We look forward to our continued partnership.

Bex Astwood
Organic Category Manager

Organics outlook

On the 2nd of June, we completed the packing of all our organic kiwifruit. It was a great season, with the weather over harvest giving us a great run to get all our fruit off at optimum maturity. Well done for all the dedication and hard work put into the harvest season.

This year the organic submits reached new highs across the industry; 3.64 million trays of GAOB and 3.63 million trays of HWOB.  So far, 61% of the GAOB, and 42% of the HWOB is ordered/shipped.

At Trevelyan’s, we packed just above 1.6 million trays of GAOB and just under 480,000 trays of HWOB. This table compares the 2023 and 2024 Class 1 Packout, average size and yield for both HWOB and GAOB. It is great to see the increases in yields, which will hopefully translate to another year of great OGRs for growers.

Our Kiwifruit Technical Manager, Pranoy Pal, recently distributed an email regarding scale guidance; scale can be a significant issue for kiwifruit. At this time of the year, it’s important to review pest findings at packing and determine if these have led to market holds. For each pack run (at a batch level), a 600-fruit phytosanitary sample is taken, and this monitors for scale and other pests. When an excess of 25 scale are detected in a sample, an unidentified scale market restriction is applied. In this scenario, it would be likely that the hold would remain, however, it can be removed if it passes reinspection and cold disinfestation requirements are met.

Japan and Taiwan have market restrictions based on scale finds, and not being eligible for these markets means you can lose out financially on a loadout premium that is paid per tray. If you would like further information on scale in your packruns please let me know.

Observing the increase in returns for organic growers for the final 2023 OGR was positive, especially the great price per tray for HWOB. Trevelyan’s final per tray OGRs were $ 14.48 for GAOB and $13.98 for HWOB; and further information including individual OGR details and comparisons can be found in the Trevelyan’s Grower Portal.

Again, congratulations on a fantastic season, and I will see you soon.

Debbie Robinson
Head of Supply

Zespri Global Supply

Zespri Global Supply (ZGS) was introduced over 20 years ago when the value of having Zespri-branded fruit available year-round was realised.

New Zealand’s kiwifruit is seasonal, so to maintain shelf space and brand presence globally, Zespri partnered with growers in the Northern Hemisphere. These partners cultivate kiwifruit during New Zealand’s off-season, ensuring a consistent supply of Zespri Kiwifruit for international consumers.

Benefits of ZGS

• Year-Round Availability: ZGS keeps Zespri Kiwifruit on shelves throughout the year, preventing consumers from needing to purchase non-Zespri branded kiwifruit at the end of the NZ supply.
• Reduced Marketing Costs: Maintaining shelf space eliminates the need for repeated marketing efforts to “re-launch” the product every season in certain regions.
• Increased returns for New Zealand Growers: Zespri are still validating modelling around the potential value that ZGS could contribute to fruit returns; however, they believe it to be around 50 cents per tray.
• Increased dividends for Zespri Shareholders: As a guide, ZGS contributed 13 cents per share last season.

Challenges and the Future

While ZGS has been successful, there are challenges. Current limitations on crop volume from partner countries restrict Zespri’s ability to meet the ever-increasing global demand, particularly for the SunGold kiwifruit variety. Proposals to increase these caps are being discussed to meet this growing demand.

Next Steps

The graph above shows the forecast demand versus the current supply, based on the currently approved hectares and shows considerably more demand than what can be supplied. For the number of ZGS hectares to be increased, a producer vote must be undertaken and must be supported by 75% of growers. Before a producer vote is considered, Zespri wants to consult with growers fully.

At the next round of Shed Talks, there will be an opportunity to discuss ZGS. A draft proposal for expansion will be shared with growers, and Zespri are keen to capture grower input to guide future direction. I encourage you to attend so that if there is a producer vote, you are well informed.

Gordon Skipage
Head of Technical

What the weather will bring?

Horticulture is both an art and a science, with the best growers able to blend both to achieve success. As an orchardist, your primary focus is to “control the controllables” – items such as the timing and quality of tasks performed. (i.e., pollination, pruning, thinning, Hi-Cane applications, spray applications and budgets, etc.) Increasingly, the most significant variable in horticulture is the weather. While you cannot control the weather, you can certainly take steps to improve the resilience of the orchard, so its impact is more manageable.

There are two things that growers should be considering now:

1. How does the weather impact your orchard and,
2. How does this information compare to the previous seasons.

For instance, weather data collected from the Plant and Food weather station in Te Puke (below) suggests that the recent summer/autumn months have been dry compared to previous years, while the winter chill is at least as good as we’ve experienced recently. All growers should review this information and ask themselves, “How will this impact my season ahead, and what changes do I need to make?”

Figure 1. Annual rainfall as of 09 June 2024 in the Te Puke region – Trevelyan’s Kiwifruit TechTip 14/06/2024

Figure 2. Winter chill (hours <7°C) as of 09 June 2024, across the main kiwifruit growing regions.

Furthermore, NIWA is predicting a La Nina weather pattern from spring 2024, potentially bringing moist, rainy conditions to most of our growing regions. As the long-term consequences of climate change become the norm, expect more regular extreme weather outbreaks (such as tropical downpours leading to flooding events).

So, what can you do in response to changing/more erratic weather conditions? The past 18 months have educated us more on planning and resilience; start reviewing what can be done financially on the orchard and include these costs in your short to long-term plans and budgets.

Consider such factors as:

• Clearing existing drains and/or improving drainage through blocks.
  • Often, improving drainage is not enough, and the soil can be described as “dead” – explore what is achievable to remedy this and bring “life” back to the soil
• Irrigation is critical. Make sure your system is fully operational, so that when it is needed, it delivers the right amount of water to the zones/areas the plant really needs it.
  • Soil profiles change throughout blocks/orchards, so having this information mapped is often useful, as are onsite weather stations that include soil moisture probes allowing for precision irrigation.
• Consider the need for alternative rootstocks (i.e. Bounty) in specific challenging locations.
• Improve soil structure to help manage water runoff, drainage, and nutrient loss.
  • There are numerous ways to do this (often referred to as “Regenerative Horticulture”) and it is becoming “mainstream” in many crops grown domestically and internationally.
    • Our respective Technical Managers (Jonathan Cutting – avocados and Pranoy Pal – kiwifruit) have a strong background in soils and soil science and are pioneering work in this space for our respective industries.
• Review last season’s performance alongside plant health.
• Is there anything you need to change based on yield, plant health and weather conditions observed in the year to date?

Like all years, the upcoming season will be different from the last, but it is important to remember the potential for significant improvement. Some orchards, in great condition, will continue to push yields. For those growers who faced challenges last year (poor plant health due to last year’s weather conditions), this is an opportunity to reset and undertake some significant structural cuts while moderating productivity. Please feel free to contact your Technical Manager or Grower Services Representative if you have any technical help we can provide.

Sarah Lei
Head of Sustainability

2023 Sustainability Report

Ten years and counting…

“That’s the funny thing about time. It is only in looking back that it’s easy to connect the dots. To see exactly why everything needed to happen the way that it did.” Rebecca Serle.

What were you doing back in 2014?  Sometimes it’s hard to remember what happened last week, never mind last year, or ten years ago. In 2014 Trevelyan’s took a significant step in its sustainable journey and produced its first Sustainability Report entitled “Our Story so Far”.  Since that time, we have continued to report annually on our sustainability progress, sharing our progress and achievements publicly.

Each report has been prepared in accordance with the latest Global Reporting Initiative Sustainability Reporting Standards (GRI Standards), these standards are the world’s most widely used sustainability reporting standard. The 2023 Sustainability Report is the tenth report we have produced.

At Trevelyan’s we think it is important to report on our sustainability performance each year, because:

1. We take time to reflect.
2. We set new goals to keep improving.
3. We like to share our journey with our stakeholders.
4. It increases transparency, credibility, and accountability.
5. We can help encourage others on their sustainability journey.

Our sustainability journey began in 2010.  In that year, we packed 7.8 million trays of fruit and generated 43.0 tonnes of landfill waste for every one million trays packed. In 2023, we packed 14.9 million trays of fruit and generated 1.5 tonnes of landfill waste for every one million trays packed. We have come a long way, but there’s still plenty of work to do, especially in reducing carbon emissions.

Our 2023 Sustainability Report includes the following:

• Trevelyan’s 2023 Highlights
• Trevelyan’s 2024 Goals
• How we Work Smart
• How we Tread Lightly
• How we Respect our People
• What our People, Growers and Stakeholders think

The Trevelyan’s 2023 Sustainability Report can be accessed HERE.

I encourage you to read it and if you have any comments or questions, please get in touch. sarah.lei@trevelyan.co.nz.

Colin Olesen
TGL Chair

Here we go again – A new season with another set of opportunities and challenges

Congratulations must go to our Trevelyan’s Growers, who have presented the best-quality fruit to the Packhouse for some years. This is reflected in the percentage of Class 1 fruit packed out, which will enhance orchard gate returns per canopy hectare.

Your Directors turn their attention to the coming season, after receiving the reports of the picking and packing of the 2024 crop. There is now a strong focus on monitoring the coolstorage and packout of the fruit to ship side, ensuring optimal onshore fruit storage results and reviewing the operations of the packhouses. The concept of continuous, small incremental improvements is a must for our industry’s continuous development. Over the next four or five years there will likely be a period of lower percentage growth in the industry national crop, but climate conditions can still throw a curve ball through that time.

Very soon it will be Annual General Meeting time with our Trevelyan Growers Ltd company, and that signals Director elections. This year the three TGL Grower Directors that complete their three-year term are Heather Hawkey, Simon Cook and Colin Olesen. All three are re-standing for election. Candidate nominations are now open and close on the 11th of July; nomination forms can be obtained from Kelly or Deb.

For the industry, there appears to be a progression towards a producer vote in November around the ZGS fruit supply to the Northern Hemisphere; expanding the allowable hectares to be planted by ZGS to ensure a twelve-month supply of Zespri branded fruit to our worldwide customers. Competition is growing from other Northern Hemisphere kiwifruit growers to occupy shelf-space in retail outlets, and with increased international consumer demand for kiwifruit, our present ZGS plantings will not produce sufficient fruit to fully occupy that shelf space. We are essentially inviting our competition to grow even more. Your involvement in industry discussions is not only encouraged, but necessary, so that you are the best possible informed, and ready to cast your vote in November.

Some of your Directors are preparing to embark on a self-funded visit to Italy and Greece to become better informed on the upcoming ZGS producer vote-that is the level of importance they place on ensuring their vote is the correct one.

Enjoy the winter – spring is coming.

Ashby Whitehead
TAGL Chair

Big decisions

TAGL has made a number of decisions that affect our wider grower base, including:

• the introduction of another exporter option, and
• a season-long pool for local market fruit supplied from the 1st August to the 31st January.

These decisions have been made with the whole grower base in mind. At the end of the season, we will review and see if we need to make any further changes.

It continues to be a challenging time for the industry, and we need to have grower representation and a grower voice. That is what TAGL has been set up for: to ensure growers have input into the decisions that affect their orcharding businesses.

I would like to thank Carol Palmer and Andrew Wylie on behalf of Trevelyan’s Growers for their contribution and service to the board.

With Carol and Andrew’s departure, we are seeking interest for more TAGL directors; if you would like to discuss more, please feel free to contact me. You gain a better insight into how the packhouse and the markets work, and having a diverse group of directors makes for better decision-making. 

Our new Head of People and Culture

Tuhia ki te rangi. Tuhia ki te whenua. Tuhia ki te ngākau o ngā tāngata. Ko te mea nui. Ko te aroha. Tihei mauri ora.

Please join us in welcoming our new Head of People and Culture, Michelle Sheehan!

Michelle joined Trevelyan’s in March, right as we started the kiwifruit harvest season.

As Head of People and Culture, Michelle’s primary role is to foster a positive and inclusive work environment and align our people practices with the company’s goals and values.

Besides her dedication to employee experience, talent development, diversity, inclusion and wellbeing, Michelle leads and develops the People and Culture Team to create a culture of innovation and continuous improvement.

Michelle brings a wealth of experience in people and culture roles across various industries, including experience in large-scale change and transformation projects. Her academic background includes a Bachelor of Laws and a Bachelor of Arts from Victoria University Wellington.

Michelle is of Ngāti Tāmaterā, Ngāti Rangiwewehi, Ngāti Maniapoto and Pākehā descent.

Welcome, Michelle!