Frankly Speaking – Week 31 Update
Please accept this Grower Update to the end of week 31 [Sunday 3 August].
Green fruit load-outs continue to be heavy reflecting a good selling season by Zespri. Our teams remain busy delivering fruit of the required specification at dockside with no significant issues to report. Our intercheck results [a reflection of our offshore quality compared to the rest of the Industry] continue to look good however there are reports of some quality issues being delivered to the market by industry. These include some obvious packing defects which is disappointing. Thankfully we are not tied up with this and understand it to be supplier specific. Hopefully the quality charging system sheets the cost home to its source.
Our green fruit loss continues to be slightly elevated and the time pool is still negative. The negative time pool is more a reflection of the reduced time rates this season rather than a reflection of fruit quality. Nevertheless fruit storage this season is certainly not as good as last– it is perhaps more like an average year. Importantly Seeka has 1,121,376 trays of non-trunk girdled fruit in 2014 compared to 5,023,833 trays in 2013. In relation to fruit loss I am reminded that the fruit loss story isn’t over until the end of the season!
Our SeekaFresh program in Australia is well underway including our retail loose and punnet programs. The wholesale market is weak as a new market entrant is tries to move substantial fruit volumes and consequently the price has collapsed. Measures such as providing customers with bonus weekly cash draws smack of desperation to sell and seems completely at odds with a well-coordinated sales approach delivering high quality fruit that matches supply with demand. The slightly lower value of the New Zealand dollar will be helpful but cannot compensate with the oversupply. SeekaFresh has no option but to meet the market - thankfully with limited wholesale volumes.
The statistics as at End Wk 31
Hayward
Seeka Packed: 17,054,522 trays Industry 69,798,811 trays [Seeka 24.4%]
Average reject rate: 17.69% Average size 33.12
Seeka fruit loss to date 0.63% Industry fruit loss to date: 0.42%
In store 5,627,040 trays
On order week 32 891,755 trays
On order week 33 629,036 trays
The green pool balance is currently at negative$414,021 [=-$0.024/ tray] at the end of week 31. Using 2013 rates the pool would be at negative $176,265.
Hayward Organic
Seeka packed : 975,494 trays Industry 3,565,431 trays [Seeka 27.4%]
Average reject rate: 24.52% Average size 35.33
Seeka fruit loss to date 0.43% Industry fruit loss to date 0.21%
In store: 205,709 trays
On order week 32 34,247 trays
On order week 33 14,514 trays
Time related earnings are estimated at $8,867 [$0.01/te]
Hort16a
Seeka packed : 509,852 trays Industry 6,490,082trays [Seeka 7.8%]
Average reject rate: 17.39% Average size 32.85
Seeka fruit loss to date: 0.88% Industry fruit loss to date 0.55%
In store: 22,397 trays
On order week 32 15,147 trays
On order week 33 0 trays
Seeka had low kiwistart GK volume. The time pool is estimated at $152,688 [$0.32/te]
G3
Seeka packed : 1,114,829 trays Industry 10,732,064 trays [Seeka 10.4%]
Average reject rate: 13.36% Average size: 27.91
Seeka fruit loss to date: 0.94% Industry fruit loss to date 0.61%
In store: 32,550 trays
On order week 32 3,318 trays
On order week 33 2,616 trays
In the home straight and looking for final orders for the fruit. The time pool is estimated at $85,204 [$0.08/te]
G9
Seeka packed : 176,823 trays Industry 1,806,363 trays [Seeka 9.8%]
Average reject rate: 15.21% Average size 31.85
Seeka fruit loss to date 5.84% Industry fruit loss to date 5.08%
In store: 5,721 trays
On order week 32 2,373 trays
On order week 33 trays
Slow orders. Please note the Zespri meeting below. Time pool earnings are estimated at $18,519 [$0.11/te]. Across the Industry approximately 50% of all G9 was repacked [last year 85%] including a large percentage of pack transfers.
G14
Seeka packed : 116,410 trays Industry 936,622 trays [Seeka 12.4%]
Average reject rate 20.31% Average size 36.08
In store: 0 trays
Fruit loss 8.36% Industry fruit loss to date 3.5%
The G14 pool is estimated at negative $106,181 [=-$0.92/tray] – please note there is no time related income in 2014.
G9 Withdrawal
The Industry is currently contemplating the compensation offer by Zespri for G9 growers to cease production. Complicating this is the fact that some growers have a high percentage of their productive orchard income in G9 and the current compensation offer of $10k per hectare plus a free G3 license isn’t enough to deter them from notch grafting G3 and growing one more G9 crop. It’s a vexed issue as you can argue that it is in the gold pools interest to remove the G9 from the pool in which case should the pool (i.e. G3 and GK growers) be prepared to compensate G9 growers to cut out now? But while this may seem sensible are we using “a pool” for something other than what was intended [to take money from the market to the grower]. Also some G3 growers are asking why they should compensate G9 growers for a commercial decision they made and they should not under-estimate the value of the G3 license being offered. And of course what does all this mean for the G14 growers who could be next? To complicate matters even more Zespri has already planned that all in-market extra-ordinary quality costs for G9 next season will not be pooled across all gold growers but will reside with the (pooled) G9 growers. At that point my head hurts. IAC met today to discuss this and it will be discussed across the Industry next week pending another IAC meeting next Friday. I will wait and see how this plays out over the next few weeks. Simply put – it’s in our best interests to get on with this and get the G9 removed but as a consequence there may be some G9 volumes next year as a result of those G9 growers who are dependent on that variety for a significant proportion of their income. In an ideal world Zespri would have signalled their intention to withdraw the variety somewhat earlier.
Grower Share Plan
Documents relating to the 2014 Seeka Grower Share Plan will be mailed shortly. Please attend to these promptly.
Kind regards
Michael
Seeka Key
Contacts