Cherry orchards in demand

Land to grow cherries is in hot demand in Central Otago, with buyers prepared to pay as much as $500,000 a hectare.

More than 150 hectares of bare land has been sold so far this year for orchard development, with prices rising between 25 and 30 per cent in the past two years.

PGG Wrightson Real Estate Cromwell brand manager Neil Bulling said enthusiasm for the crop showed no sign of stopping, despite tough conditions last summer.

"This summer was the hottest on record, bringing the harvest forward, putting pressure on packhouses and resulting in smaller, softer fruit.

‘‘That said, for the past few years plenty of people have been keen to grow cherries, and one challenging season has not dampened that enthusiasm."

Existing developed orchards could find buyers willing to pay above $500,000 a hectare, he said.

However, owners are reluctant to sell, meaning potential investors are interested in buying bare land instead.

Bulling said suitable blocks were selling at about $100,000 per hectare and were typically Cromwell lifestyle properties of about 8ha which were subdivided from farmland.

"If they have a good water supply, these blocks are ideal for cherries," he said.

A mix of existing growers and newcomers entering the market are driving Cromwell’s current cherry development. Cherry trees take four years before they begin to fully produce.

Bulling said orchard development was more than just planting trees as they would need to organise picking, packing and export well ahead of time.

"With so much new development coming on, new orchardists cannot take it for granted that the industry can handle everything. Just planting a block is not enough.

‘‘You need all the right arrangements in place well in advance for what happens from there."

The big cost associated with buying land for cherries was justified, Bulling said.

"You might spend $100,000 per hectare to purchase the bare land, you need to budget another $120,000 per hectare to develop the orchard, in stages.

"Then, once you are producing cherries, an average orchard might net $50,000 per hectare per annum, while those that are more productive will make $70,000 to $80,000.

‘‘That justifies the $500,000 per hectare value you would expect to pay for a producing cherry orchard."