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Kiwifruit demand setting new benchmarks

October 2021

Demand for kiwifruit property is intense and increasing for existing orchards and bare land.

Fully developed gold kiwifruit orchards in the most sought after Bay of Plenty districts have sold recently at $1.7 million per canopy hectare. Although that value comfortably exceeds most other uses of primary production land, and continues to rise unchecked, returns routinely justify such investment.

For sale by tender in October, one of the Bay of Plenty’s most prestigious gold kiwifruit orchards may further extend price records, while bare land blocks suited to growing the crop are also under intense demand.

Listed by Stan Robb of PGG Wrightson Real Estate, Te Puke the 11.5 canopy hectare orchard, four kilometres from Paengaroa, ticks all the boxes, as Stan explains.

“Developed by sector leader BayGold and fully planted in SunGold kiwifruit in 2014, this is a full production block, sitting across two titles, offering a generous road frontage, with no residence or outbuildings to impede productivity. In 2019/20 its first crop yielded 14,500 trays per canopy hectare, followed by 18,500 trays last season. It features a 12inch bore with consents, frost protection and irrigation, extensive use of artificial shelter, is strip maled, and has a large load out area. In a recognised early start area, this orchard will be a magnet for growers motivated to consolidate their holdings,” he says.

Demand overwhelms the supply of available orchards, meaning development of production blocks is the only way investors can enter the sector, or existing orchardists expand.

Dave McLaren of PGG Wrightson Real Estate, Te Puke is selling 40 hectares of bare land subdivided from a dairy farm. He says it meets all requirements for land use change.

Kiwifruit demand

“This is a premium block on excellent soil, ranging from 130 to 140 metres above sea level, with a horticulture water take for irrigation. Able to be contoured to suit, the block’s scale makes it a rarity in the district, and an enticing prospect as a generous sized orchard,” he says.

Dave anticipates staged conversion will result in the property going fully into SunGold.

“Developing a block requires considerable resource. Some farmers would develop the orchard themselves, or engage a third party to do so. My vendor is not selling the whole farm, meaning the buyer will not take on existing infrastructure surplus to kiwifruit requirements.

“One approach is to sub-divide the block, develop smaller lots individually, and sell each to finance the next development phase,” he says.

Developing a kiwifruit orchard from bare land requires contouring to maximise productivity, vine support structures, irrigation, and for SunGold, a licence to produce the lucrative variety.

“Shifting the soil from the high spots into the valleys to create flat space for planting ranges from $15,000 to $20,000 per hectare; putting in support infrastructure approximately $50,000 per hectare; while artificial shelter sits between $165 and $200 per metre depending on the desired shelter belt height. Plus the cost of vines. Additionally, Zespri’s 2021 tender set the price of a licence to grow SunGold at $550,000 per hectare, up from $400,000 per hectare last year, further underlining the variety’s appeal.

“According to Zespri, the 2020/21 average orchard gate return for SunGold was $12.46 per tray, and $177,846 per hectare. When the more successful orchards double that, the demand for property capable of high kiwifruit yields is entirely rational,” he said.

For sale by tender, offers for the 40 hectare Te Puke bare land property must be lodged by late October.

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