Or­chard Man­age­ment

Va­ri­eties

The Orchardist - - Contents - By John Wil­ton

Va­ri­ety mix is much more crit­i­cal for or­chard busi­nesses that are not ver­ti­cally in­te­grated op­er­a­tions be­cause they only have a sin­gle profit cen­tre, the Or­chard.

Ver­ti­cally in­te­grated op­er­a­tions gen­er­ally have sev­eral other profit cen­tres, cer­tainly a pack­ing and cool­store busi­ness and nowa­days also an ex­port­ing and mar­ket­ing arm. These ver­ti­cally in­te­grated busi­nesses gen­er­ally have a dif­fer­ent set of driv­ers to the in­di­vid­ual grower, par­tic­u­larly in the short term. Their main re­quire­ment is reg­u­lar sup­ply of fruit to pack and ship in or­der to max­imise the re­turn on their down­stream in­vest­ments. In the long term, they also have to adopt a pro­gres­sive at­ti­tude to in­vest­ment in their va­ri­ety mix but for them it may be less ur­gent than for an or­chard only busi­ness.

Many years ago, prior to dereg­u­la­tion of the do­mes­tic mar­ket, there used to be a mech­a­nism built into grower re­turns called the dis­trict dif­fer­en­tial (DD) which was de­signed to bol­ster the re­turns to grow­ers lo­cated near New Zealand’s ma­jor cities by adding to their re­turns the dif­fer­ence be­tween their trans­port costs to their ad­ja­cent city mar­ket and the higher trans­port cost of ship­ping fruit in from Nel­son or Hawke’s Bay. In the long run, the DD did not help its re­cip­i­ents be­cause it re­moved the in­cen­tive to mod­ernise their va­ri­ety mix. I re­mem­ber do­ing a fruit value ex­er­cise com­par­ing the value of the va­ri­ety mix in the dis­trict re­ceiv­ing the high­est DD pay­ment per car­ton with the Hawke’s Bay va­ri­ety mix value where grow­ers were forced to base their va­ri­ety mix on mar­ket re­turns. This showed that the pre­mium for keep­ing up with con­sumer de­mand and match­ing the va­ri­ety mix to this ex­ceeded the DD pay­ments. It is no dif­fer­ent to­day.

Stand alone or­chards need to main­tain a high profit mar­gin va­ri­ety mix. This may mean sup­ply­ing a num­ber of dif­fer­ent mar­keters rather than fo­cus­ing on just one mar­keter. This ap­proach is also a good form of mar­ket di­ver­si­fi­ca­tion.

THE MAR­KET IS CROWDED WITH VA­RI­ETIES

The Euro­pean Fruit­grow­ers mag­a­zine, No 5, 2017 fea­tures ap­ple va­ri­eties. In it there is a ta­ble, first pub­lished by Bel­rose Inc in their World Ap­ple Re­view 2016 which lists 45 es­tab­lished va­ri­eties with their per­cent­age of to­tal pro­duc­tion world­wide ex­clud­ing China. The top 10 va­ri­eties on their ta­ble in 2015 and fore­cast of the fu­ture per­cent­age of world pro­duc­tion in 2025 is shown in Ta­ble 1.

Jon­agored is an im­proved colour sport of Jon­agold so if its red strains were treated in a sim­i­lar man­ner to the Gala sports it should be fur­ther up the ta­ble as a sin­gle va­ri­ety which would bring num­ber 11, Hon­ey­crisp into the top 10. Had the data in­cluded Chi­nese pro­duc­tion, Fuji would be at the top of the list, rather than num­ber 4. The ta­ble also shows what I think are other va­ri­eties which are 17.85%, 21.76% re­spec­tively for 2015 and 2025 in­creas­ing by 18%.

Among the other va­ri­eties, fur­ther down the list are some re­cently in­tro­duced va­ri­eties in an ex­pan­sion phase and many older va­ri­eties as well as some not so old va­ri­eties go­ing into de­cline. The ones show­ing sig­nif­i­cant growth be­tween 2015 and 2025 are listed in Ta­ble 2.

Sciros is shown in the ta­ble as in­creas­ing slightly but the rest of our newer va­ri­eties ob­vi­ously make up some of the other va­ri­ety cat­e­gory.

His­tory of the fruit in­dus­try shows that huge num­bers of new cul­ti­vars are in­tro­duced but very few of them ac­tu­ally suc­ceed in the long term. In­ci­den­tally, more than half of the listed va­ri­eties are in de­cline. There are many new in­tro­duc­tions around at the mo­ment. The Euro­pean Fruit­grow­ers mag­a­zine list 17 promis­ing va­ri­eties that have been tested in Europe. This list in­cludes the Plant and Food va­ri­eties Prem A34 and Prem A96 (Rockit ® ) and the US va­ri­ety Min­neiska (SweeTango ® ). Also men­tioned but not tested in Europe is WA38 (Cos­mic Crisp ® ).

The mag­a­zine also men­tions that there are more than 80 ap­ple breed­ing pro­grammes around the world. These pro­grammes have a wide fo­cus and are of­ten look­ing for va­ri­eties with

spe­cific char­ac­ter­is­tics such as dis­ease re­sis­tance, snack ap­ples, red flesh or dif­fer­ent skin colour char­ac­ter­is­tics.

HIGH VOL­UME VA­RI­ETIES REL­A­TIVELY STA­BLE

The top four va­ri­eties on Bel­rose’s list ac­count for around 50% of ap­ple pro­duc­tion and will drop off a lit­tle as newer in­tro­duc­tions eat into their mar­kets. These are the true com­mod­ity va­ri­eties of the world. We have sig­nif­i­cant pro­duc­tion of two of them, Gala which is a New Zealand va­ri­ety and Fuji. Gala was de­vel­oped here so is well suited to our growing con­di­tions. Here the orig­i­nal Gala is now very hard to find so the Gala we now grow has come through sev­eral gen­er­a­tions of re­s­e­lec­tion to­wards im­proved colour types which make it much more grower friendly. It is also an early sea­son va­ri­ety not well suited to long term stor­age even though ad­vances in stor­age tech­nol­ogy have en­abled on North­ern Hemi­sphere com­peti­tors to mar­ket their crop for the whole year. Gen­er­ally, in long term stor­age, this va­ri­ety holds its fruit con­di­tion but loses its flavour so not as good an eat­ing ex­pe­ri­ence as a fresher South­ern Hemi­sphere Gala. For this va­ri­ety, our ‘niche’ lies in de­liv­er­ing an eat­ing ex­pe­ri­ence in our sea­son that can­not be matched by stored North­ern Hemi­sphere prod­uct.

Fuji is in a sim­i­lar sit­u­a­tion. It is a dif­fi­cult ap­ple to store for much more than six months and re­tain good eat­ing qual­ity, par­tic­u­larly tex­ture and flavour.

“Va­ri­ety mix is much more crit­i­cal for or­chard busi­nesses that are not ver­ti­cally in­te­grated op­er­a­tions be­cause they only have a sin­gle profit cen­tre, the Or­chard.”

For both these va­ri­eties we can only sur­vive at the pre­mium end of the mar­ket. This means growing the best strains avail­able then do­ing the best job pos­si­ble in re­gard to crop hus­bandry, then har­vest­ing at op­ti­mum ma­tu­rity to cap­ture their full eat­ing qual­ity po­ten­tial.

These ma­jor world cul­ti­vars tend to fall into the bland sweet flavour cat­e­gory which has uni­ver­sal ac­cep­tance among con­sumers. Dis­cern­ing ap­ple con­sumers are gen­er­ally look­ing for more flavour char­ac­ter. This is the mar­ket that sup­ports the smaller vol­ume ‘niche’ va­ri­eties.

NICHE VA­RI­ETIES

In New Zealand, Royal Gala and Fuji make up about 35% of our pipfruit or­chard area but sup­ply 44% of our ex­port crop. By world stan­dards, the re­main­ing 65 or so per­cent of our pipfruit or­chard area can be con­sid­ered ‘niche’ va­ri­eties tar­get­ing small spe­cial­ist mar­ket sec­tors aim­ing at the dis­cern­ing con­sumer.

Po­ten­tial mar­ket size for most of these va­ri­eties is rel­a­tively small and eas­ily flooded as demon­strated by our ex­pe­ri­ence with Brae­burn shows. Once its pro­duc­tion ap­proached 2% of world sup­ply, the mar­ket for it col­lapsed. Now that sup­ply and de­mand bal­ance which has led to some price re­cov­ery to the level that high per­form­ing blocks are now eco­nom­i­cally sus­tain­able. The prob­lems we ex­pe­ri­enced with Brae­burn were partly self-in­flicted be­cause the in­dus­try al­lowed the mar­ket’s per­cep­tion of the need for high fruit colour to over­ride im­por­tant in­ter­nal char­ac­ter­is­tics of crisp­ness, flavour and juici­ness. We fixed the colour prob­lem but in do­ing so, we turned the va­ri­ety into a mealy soft fruit which no­body wanted. This mis­take can­not be re­peated with other va­ri­eties and is one of the great­est risks our in­dus­try faces.

We have a good port­fo­lio of in­ter­est­ing ‘niche’ mar­ket va­ri­eties which are find­ing prof­itable mar­ket outlets. Their fu­ture is very de­pen­dent on de­liv­er­ing a con­sis­tent high qual­ity prod­uct that meets mar­ket re­quire­ments and ex­pec­ta­tions. With the world now start­ing to jump onto the new va­ri­ety band wagon, many more new ‘niche’ va­ri­eties will ap­pear. His­tory shows that only a very small pro­por­tion, if any of them will ever be­come im­por­tant high vol­ume va­ri­eties and many will have only lim­ited sus­tain­able eco­nomic life.

TAKE A FLEX­I­BLE AP­PROACH TO VA­RI­ETIES

Pro­gres­sive or­chards need to keep abreast of the va­ri­ety fash­ion busi­ness. Do not ex­pect ev­ery va­ri­ety you plant to have long term sus­tain­able vi­a­bil­ity. Ex­pe­ri­ence shows that some fall by the way­side.

New Zealand is well placed to play the va­ri­ety game. We have a long growing sea­son and can bring or­chards into pro­duc­tion rapidly, even at rel­a­tively mod­er­ate plant­ing den­si­ties. Most of our or­chard plant­ings are planted at

what are for us, in­ten­sive growing sys­tems. In these or­chards, va­ri­eties can be changed rel­a­tively quickly by graft­ing, so if a new va­ri­ety fails to meet ex­pec­ta­tions it is sim­ple and rel­a­tively in­ex­pen­sive to change to another va­ri­ety.

THE TREND TO HIGHER COLOUR STRAINS

This trend is firmly es­tab­lished among ap­ple va­ri­eties and can be traced back for many years. Once a good red sport emerges for a bi­colour ap­ple va­ri­ety, the writ­ing is on the wall for stan­dard colour strains, par­tic­u­larly for our ma­jor Asian mar­keta which de­mand higher and higher colour.

There are now good high colour strains for Cripps Pink, Fuji and the Gala group. Re­tain­ing stan­dard strains of these va­ri­eties rep­re­sents lost op­por­tu­nity for im­prov­ing your va­ri­ety mix.

Use of tools such as re­flec­tive mulch and colour pro­mot­ing growth reg­u­la­tors, has pro­longed their pro­duc­tive life by im­prov­ing grade 1 re­cov­ery but is nowhere as ef­fec­tive as us­ing these tools on high colour strains.

RECOG­NISE THE OP­POR­TU­NITY COSTS

Poorer colour strains strug­gle to give good re­turns, there­fore have lower profit mar­gins com­pared to bet­ter strains. In to­day’s mar­ket, it is dif­fi­cult to har­vest poorer colour strains at op­ti­mum ma­tu­rity be­cause of their prob­lems with de­layed colour de­vel­op­ment.

In a dif­fi­cult har­vest sea­son, such as the one we have just had, get­ting the har­vest logged down on these lower re­turn blocks can have huge op­por­tu­nity costs be­cause of the flow on ef­fect of de­layed har­vest on be­ing able to har­vest high value va­ri­eties at their op­ti­mum ma­tu­rity.

There is also the re­lease of sea­sonal work­ing cap­i­tal that oc­curs when these older blocks are pulled out. These days work­ing cap­i­tal re­quire­ments for older ma­ture blocks is likely to be in the vicin­ity of $12,000 to $15,000 per hectare which would prob­a­bly give a bet­ter re­sult be­ing di­rected to­wards im­prov­ing the per­for­mance of higher value va­ri­ety blocks.

Ref­er­ence: Euro­pean Fruit­grower mag­a­zine, No 5, 2017

Fig 1. Scifresh fore­cast to in­crease 20% by 2025 to make up 0.41% of the global ap­ple crop ex­clud­ing China.

From left: Fig 2. Kanzi ® - A Euro­pean com­peti­tor for Jazz ® which has made the list and is tipped to con­tinue to in­crease. Fig 3. Prem A 96 (Rockit ® ) – Be­ing tri­alled in Europe and now well es­tab­lished here has pi­o­neered a new ap­ple cat­e­gory, the snack food mar­ket.

Fig 4. PremA129 – A re­cently re­leased va­ri­ety which will have many com­peti­tors from other breed­ing pro­grammes.

Fig 9. It is rel­a­tively easy to change va­ri­eties in in­ten­sive plant­ings as these third leaf dou­ble leader grafts show.

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