Is a mature G3 Kiwifruit Orchard really worth a premium of $200,000 per hectare over and above what you would pay for a Hayward Green Kiwifruit Orchard?
Let’s do the maths. For the sake of comparisons we will assume both the Hayward Green and the G3 orchard are in the “dress circle” of Te Puke, conventional rather than organic (that’s a topic for another blog) and grown on pergola (that too is a topic for another blog!). In recent years we have come to expect 10,000 trays per hectare from a good Hayward Green orchard on average. Production per hectare from a comparable G3 orchard is still unknown but 15,000 seems very achievable and sustainable. In fact 17,000 looks likely too but we will use 15,000 for now.
As far as Orchard Gate Returns go I will use medium-term forecasted returns of $5.50 per export tray for Hayward Green (maybe a bit generous but I have a feeling Hayward Green maybe the underdog here) and $6.50 for G3. Down significantly on the current year’s forecast but we do have a huge amount of G3 crop coming on stream over the next few years that will need to be sold. And it is the medium term picture I am after here. That makes an Orchard Gate Return per hectare of $55,000 for Hayward Green and $97,500 for G3. For growing and picking costs I will use $28,000 per hectare for Hayward Green and $30,000 for G3. Comparable growing costs per hectare for G3 are still yet to be absolutely determined due to the lack of mature canopies to make decent comparisons. But I feel that I am pretty safe at $30,000 per hectare for G3. That means in the median-term I would expect a decent Hayward Green orchard to net $27,000 per hectare and a decent G3 orchard $67,500 on average. I am of course ignoring the extra-ordinary hail and frost risk. That’s a premium of $40,500 per hectare in favour of a G3 orchard.
If I was in the market for a Kiwifruit Orchard would I pay an additional $200,000 per hectare for a mature G3 one? You bet I would. That’s a return of over 20% on the $200,000 per hectare premium which is well worth chasing despite the additional PSA and market risks associated with the G3 variety. And for the current year and next at least the return on the $200,000 premium will be even greater than 20%.
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