28 May 2012

Zespri cuts costs to survive challenging years

2:13 pm on 28 May 2012

Kiwifruit marketer Zespri is tightening its belt in expectation of a tough two years ahead.

The company released its first price forecast for this season, alongside a full-year profit which has almost tripled to $20 million on the back of a record crop of 116 million trays.

It is also forecasting higher prices for gold kiwifruit growers as production plummets due to the bacterial disease PSA.

Zespri expects to pay a return per tray of $6.90 to $7.30 for green kiwifruit and $8.45 to $8.95 for organic fruit, which is on par with last season.

Gold kiwifruit growers can expect $13.70 to $14.20 a tray, a rise from $11.91 last season.

However Zespri chairman John Loughlin expects prices to fall over the next two years and says this season's crop is likely to be reduced as kiwifruit vines succumb to PSA.

The crop is expected fall further the following season because new vines take three years to bear fruit.

To help the company survive the next two years, it has reduced overheads by $10 million through a restructuring and has a major investment underway initiative in Asian markets and new markets, Mr Loughlin says.

New Zealand Kiwifruit Growers chairman Neil Trebilco says the forecast is bittersweet and it's essential to get the industry back on track to get a growth curve again.