Shipping to China has resumed however, product requires significant checking and in essence 100% repack. The remaining Gold3 China allocation has been reduced with fruit being prioritised away from China as the Industry heads to the home straight in that variety. There is less flexibility in Hayward with greater proportion still to be sold.
These events expose the true nature of the Industry and in particular the blunt measure of fruit loss, a measure of performance by some growers without focussing on time earnings. The problem with 100% repack is that more of the fruit will be checked, the China standard is harder, and fruit loss will be higher. Discussions are ongoing to increase the level of compensation to growers from the National pool for trays supplied to China, removing the inequities between growers when supplying to the China standard. Suppliers have been making their fruit unavailable for load outs by applying China holds either as a mechanism to manage their inventory or to avoid exposing their fruit to potential increased loss, despite the discussion that will see the time earnings compensate, once agreed.
As a result Seeka has been asked to supply more of the orders for China than national share – with 33% of Hayward china orders compared to our 22% market order share. While Seeka is prepared to do the heavy lifting, we have said we will do our share unless the commercial arrangements are more favourable to the growers who will be exposed to a greater loss.
In spite of the challenges, fruit loss as a bald statistic continues to be low, particularly in SunGold. [And time earnings are accumulating well]
Kiwistart payments will be late
Zespri have struggled with their SAP system. Modern accounting systems referred to as “ERP” are great for doing the same thing over and over, but struggle when there is change [like split weeks] or when processes are away from the norm as we get with grower payments. We are hoping to make the Hayward payment this Friday night. We remain unsure whether Zespri will be able to make the Gold 3 payment this week and if they do, Seeka will make the Sungold payment early next week.
We have to admit our own error in the taste payment. This was the result of a piece of software not operating as expected and related to the changes in taste by size for SunGold. This has been tidied up to growers with the payment made last night. We apologise for this.
To the numbers [as at midnight 14 August]
Corporate announcement date
Seeka expects to announce its unaudited Financial Results for the 6 months to 30 June 2016 on 26 August.
Regards
Michael
Seeka Key
Contacts
