Coal to Newcastle? No, California Kiwi to New Zealand!

It was an industry anomaly, and California kiwifruit producers are still smiling over the 50,000 trays¹ of kiwifruit they shipped to New Zealand beginning last December.

Taking advantage of an unexpected kiwifruit shortage in New Zealand provided a much-needed sales lift for U.S. producers who had just lost their biggest overseas market. After buying nearly 500,000 trays of kiwifruit during the 1996/97 crop year, South Korea was hit by severe financial problems, and imports of California kiwifruit to that nation’s consumers fell to a dismal 420 trays in market year 1997/98.

Thankfully, consumers in other countries have appeased their cravings for the fuzzy orbs, upping foreign consumption and easing export market woes for the U.S. kiwifruit producers.

As with some other U.S. export falloffs arising from the Asian financial crisis, North American Free Trade Agreement (NAFTA) partners have stepped into the breach, importing increased amounts of U.S. kiwifruit. Canada bought 675,000 trays in 1997/98, 26 percent more than the year before. The same year, Mexico’s imports rose 121 percent above the 1996/97 level, to 85,000 trays, reflecting a recovering economy.

And, except for Korea, Asian markets bought over 150 percent more than they had the year before. Taiwan led the region, followed by Hong Kong and Japan.

New Zealand's Bumper Crop a Sellout

So what happened in the land of the kiwifruit to provide California producers with this unique opportunity? It was all due to an excess of success by their kiwi rivals.

El Niño conditions provided a near-perfect growing season in 1997/98, and New Zealand produced a kiwifruit crop exceeding 63 million trays. With such bounty at hand, New Zealand's consumers by all rights could have expected their favorite fruit to be plentiful and cheap during the holidays.

By taking advantage of a developing export market in the United States and supplementing the short European Union crop--both abetted by a devalued New Zealand dollar--the producers netted a whopping NZ$404 million (US$220 million).

And they sold out.

Unfortunately, producers inadvertently shorted the faithful kiwi constituency at home. There was hardly a fuzzy fruit to be had.

But consumers weren't left holding an empty grocery bag. Many New Zealanders were willing to spring for the $3.22-per-kilogram² California kiwifruit, though they were accustomed to paying less than half that for the local product.

With next year's New Zealand crop expected to be 10 percent smaller than this year, there may be further opportunity for the California producers.

The South Pacific Island nation’s weather hasn't been so favorable for the plants, and many growers, encouraged by last year's profits, are planting the new Zespri Gold variety, which will need time to reach full production.

The industry will also be adjusting to the once government-regulated producer board, Kiwifruit New Zealand, which is assuming new private cooperative status.

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¹1 tray = 7 pounds.
²1kilogram = 2.2046 pounds.

Last modified: Thursday, October 14, 2004 PM