Frankly Speaking

Welcome to this week’s edition of Frankly Speaking, Seeka’s grower and stakeholder update.

There is a lot of work going on in the commercial side of the Industry as post-harvest companies actively manage our kiwifruit inventory. The reality is that 2021 is a more challenging year right across the industry and there is a lot more frustration in the post-harvest sector after a couple of kinder storage seasons. There are a number of factors that have added to the challenges in the current year including weather. The autumn period was a lot wetter and more humid compared to previous years meaning that the fruit is less likely to want to store. The Hayward fruit has a higher yield and lower dry matter and the harvest dragged on in the regions. In the case of SunGold, Zespri’s new maturity standards resulted in delayed harvest for some, as smaller sizes were harder to clear. Fruit was softer across the entire harvest. Even with Seeka removing the reject charges on mainpack 39’s – there was still some delays although comparatively our harvest completion was timely.

At the moment the inventory is performing ok and unremarkable. There are only pockets of issues. However we are wary of how the fruit is going to hold up, and it is likely that there will be more costs as we deliver the fruit to market in premium quality. Accordingly our attention and that of Seeka Growers is on the marketing performance, sales rates and transparent reporting of progress back to the growers. This explains our pinpoint focus on the sales and repeated unsuccessful requests for more detail.

Last week we profiled our approach to the proposed weakening of the softs standard through a trial to allow an increased allowance of softs to go to the market. Seeka was on the wrong side of the argument as it promoted it’s and the Seeka Growers view.

This week, we profile the issue with Hail Insurance. The national pool purchases hail insurance on behalf of growers and Seeka Growers also takes cover for our growers with a policy from AON. Many individual growers also take insurance. Under the current Zespri policy all growers get an amount per tray up to a maximum for $7m for SunGold and $6m for Hayward. If the quantum of the total claims is under the maximum by variety, then the affected grower will receive a payment of 75% of the OGR for SunGold and 85% for Hayward. And if the quantum is more than the maximum then the amount a grower receives is prorated down.

The 2021 hail insurance policy review has been completed.  Zespri has advised the current commercial insurer will be exiting the market and a commercial alternative has not been found. In the case of no commercial insurer the respective pools will fully fund the hail insurance.

And there was a massive hail event in Motueka on Boxing Day and this has depleted the funds, resulting in an estimated payment of less than $3 per tray to those growers. So what to do?

It seems likely that Zespri will retrospectively increase the cover set in place through the supply contract by making changes in adopting the next years approach. Seeka Growers is firmly opposed to this.

NZKGI have told the hail review committee that the insured values were not appropriate. In the 2021/2022 year (next growing season year) the insured value will be based on the average “on orchard” costs plus an uplift of 50% of the average on orchard costs.

The purpose of the uplift was to: 

- Recognised that in using the average on orchard costs, 50% of the industry have a higher cost structure
- Cover for the additional hail related costs that growers incur after being hailed
- The average orchard costs are a season behind, as the policy is set in May for the following season

The increasing value of the pools has been recognised and for 2021/2022 the hail policy limit for SunGold is $18.5m, SunGold Organic $530k, Hayward $7.5m, Hayward Organic $490k, Sweet Green $25K and Red19 $50K.

Seeka growers is opposed to that taking the position that if the National Pool is to support Hail Insurance, it should covers costs only at a per hectare rate and any additional cover should be taken either the supply entity or individual.

In July the NZKGI forum members will consider whether there is support for a retrospective assessment of the 2020/21 using the principles agreed for the 2021/2022 hail policy. This properly covers this issue and for the record Seeka Growers Commercial Hail Insurance cover, provides you with $2.00 per tray cover up to $10m in total.

Fruitometry

Last week, Seeka announced a minority investment into leading digital scanning and technology business Fruitometry. This technology is real smart. It will provide our growers with the ability to better understand the crop they have in the orchard, and adapt their labour management to exactly where it should be deployed. It will also give Seeka a better understanding about the crop and volumes we anticipate to handle for our growers, helping greatly with our capacity planning. Our investment will enable this business to expand its service and develop further technologies, and to better integrate its results with Seeka. We are delighted to announce it and will promote its service to you in the future.

To the numbers:

OPAC

Seeka

Kind regards
Michael