Following an assessment of its cyclone damage, major Hawke’s Bay fruitgrower T&G Global has just forecast a 2023 loss before tax of $28m-$34m for 2023.
The losses anticipated include cyclone clean-up costs and write-down of trees and infrastructure damage. Four orchards accounting for 13% of T&G’s production hectares in HB were severely impacted. And another 22% were damaged and expected to yield less for two or three years.
Bad weather in the previous summer had already reduced output, resulting in a net loss of $900,000 for the full year ending 31 December. A cost reduction programme has been put into place.
Another HB producer announced somewhat better news.
Rockit Global produced 29,000 bins of apples this season, 20% ahead of the previous year. However, the company had been aiming for a 100% increase. Half the company’s Hawke’s Bay orchards were fully harvested, and another 25% partially; the company lost about one-third of its crop.
Meantime, Bostock NZ also lost 30% of its apple crop (and significantly more of its squash and onions), with 7% of its orchards completely destroyed. Scales Corp’s Mr Apple announced damage to four of its 15 HB orchards, three ‘extensively’ damaged, accounting for 28% of its acreage.
Loss of immediate production for growers is just the tip of the iceberg. It will take a year or two to see which flooded-but-standing trees will actually survive root damage and disease. Replacement replantings will take 5-6 years to produce commercially-viable crops (i.e. cash returns), assuming tree stock is available.
And then there’s infrastructure loss – e.g., support structures, machinery, irrigation systems. One major grower puts his infrastructure loss at $15 million.
All forms of revenue loss then adversely impact on asset value, probably leading banks to be more risk adverse and worried about their loan/asset ratios and less lending-friendly.
Consequently, all eyes are on the Government, which is yet to announce what kind and level of support will be provided by taxpayers. The ‘ask’ from HB fruit, grape and veggie growers is in the $800m range.