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Property Express - New heights for Bay of Plenty kiwifruit

March 2021

Bay of Plenty kiwifruit land has been fiercely sought after since the PSA crisis tapered off in 2015.

That trend is increasing further as rural property’s most heavily demanded class becomes even more highly prized in the Covid low interest rate era.

Dave McLaren of PGG Wrightson Real Estate, Te Puke says recent developments around green kiwifruit show the strength of the demand.

“Interest in green kiwifruit has lifted considerably, with strong market indications that green orchards can be worth up to $700,000 per canopy hectare. However, there is a big qualification with that price: any orchard in green kiwifruit has to tick the right boxes for infrastructure, location, altitude and microclimate that will suit a switch to growing the gold variety.

“Anyone looking to continue to operate such an orchard as a going concern valued at $700,000 is unlikely to make much money with green vines in the ground. Any sale at that price assumes a new owner will apply to convert it to gold at Zespri’s next licence tender, this autumn.

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“Industry expectation suggests a gold licence will cost $500,000 per hectare this year. Starting with a $700,000 per hectare green orchard, adding the licence, plus another $100,000 to convert from green to gold brings the budget to $1.3 million, slightly less than the sale price of the best located gold orchards. Buying green, cutting over and converting to the more lucrative variety seems the best, if not the only way for those in the industry to extend their gold orchard holdings,” says Dave.

Dave McLaren‘s colleague Stan Robb believes the kiwifruit property market will remain elevated.

“Obtaining an orchard already growing gold kiwifruit is virtually impossible. Competition can become extreme for those few that come on the market. Otherwise, every orchardist we talk to asks if they can buy bare land.

“Because the crop is in such strong demand, suitable bare land is also at a premium. Industry understanding is that some large blocks, currently in dairy, are lined up to change hands for conversion to kiwifruit, subject to securing licences. This is likely to amount to between 400 and 500 hectares of new orchards. A dairy farm suitable for kiwifruit probably commands three or four times what it is worth for milking cows,” says Stan.

Paul Wiltshier is Bay of Plenty Area Sales Manager for PGG Wrightson subsidiary FruitFed Supplies. He says kiwifruit orchardists are looking forward to harvest.

“Plenty of rain in early February eased the consternation of those growers without irrigation. With picking beginning in March, we are set for a favourable harvest this year. Gold orchards are forecast to produce around average fruit quantities, while some green orchards look set to crop heavily.

“Apprehension around the labour shortage due to Covid and border restrictions is a concern to many, and those issues need to be addressed. So long as they can be, orchardists are positive about the future,” says Paul.

 

Dave McLaren

Rural & Lifestyle Sales Consultant

M 027 223 3366

dmclaren@pggwrightson.co.nz 

 

Stan Robb

Rural & Lifestyle Sales Consultant

M 027 473 9322

CandSRobb@pggwrightson.co.nz

 

Read the full edition of the Autumn Property Express here.

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