Proponents of the Ruataniwha dam have projected additional productive investment in orcharding and grape growing as an outcome of the scheme.

As a fourth generation orchardist, consultant, apple breeder, export coordinator of apples and wine, here is my assessment of the viability of successfully growing apples and wine grapes on the Ruataniwha plains.

Present situation

Traditionally the Ruataniwha plains have been successfully used for beef and sheep, with some cropping – grain and fodder crops, lucerne etc.

The soils of the Ruataniwha are currently being suggested as suitable for apple and grape production. In broad terms, it is true that apples and grapes can be grown almost anywhere in NZ, from the humid areas of Northland to the desert-like areas of Central Otago.

The Ruataniwha plains saw apple plantings expand from a very small base in the early ‘80s to about 500 hectares. But during the last 20 years there has been no significant or any new planting.

By contrast, the Heretaunga Plains has about 5,000 hectares planted in apples, with more being added every year. In fact, currently the commercial fruit tree nurseries have a three-year waiting list for apple trees.

In the coming winter of 2016 approximately 1,000,000 apples trees will be planted in NZ. The greater percentage will be on the Heretaunga plains, with virtually none being planted on the Ruataniwha plains.

The grape plantings that were first established in the 1980s all have gone, apart from a few niche vineyards in selected areas on the fringes of the Ruataniwha plains where some quality wines are produced.

The question has to be asked: why has apple production expanded on the Heretaunga plains, and not on the Ruataniwha plains, allowing the former to become the largest apple growing area in NZ and the second largest grape area?

Heretaunga Plains

The number one and over riding factor for the investor when considering land purchase and use is the returns risk.

Based on the following reasons, the Heretaunga plains arguably has the lowest returns risk for apples and possibly grape production in NZ.

Land value – quality horticultural currently selling for $100,000 hectare and rising.
Water – strong aquifers.
Soil types – generally deep and heavy with great water holding capacity.
Hail – Heretaunga, like all horticultural regions, can and has been hit with hail, but in the main, the areas affected are localised and in many instances the damaged fruit can be thinned off.
Frost – Spring frost generally are not severe, with many areas not requiring frost protection, while in the susceptible areas frost can be warded off with water or wind machines.
Wind – generally not severe enough to damage trees or fruit.
Temperatures – Summer temperatures generally under 30C (some seasons a few days over 30C); the sea breeze lowers the temperatures on the more coastal orchards, reducing stress on the trees and fruit.
Harvest dates – almost two weeks earlier than Nelson, which gives the Heretaunga growers a distinct advantage early into the markets of Asia with Royal Gala when the prices paid are the highest.
Proximity – easy access to packhouses, coldstores and Napier Port. Now let’s look at Central Hawke’s Bay.

Ruataniwha Plains

Comparing some of the same factors for the Ruataniwha plains …

Land value – probably 1/3 of that on the Heretaunga plains; 40 hectare blocks would be the minimum size required for a commercial apple orchard, grapes probably double that. Due to the lack of smaller sized blocks, an investor would be faced with buying a sheep farm with horticultural suitable land on it in order to plant apples and or grapes.
Soil – generally light and shallow on a gravel base, with poor water holding capacity.
Hail – a major threat for both grapes and apples and a fact of life on the Ruataniwha plains. Every year the orchards suffer hail damage from minor to major. One large orchard block was sold for the sole reason that every year it was hit by hail. In its 20-plus year life it never returned an exportable crop; it was returned to sheep and cattle farming.
Frosts – there are more of them; they are heavier and last longer by several hours, requiring the largest wind machines available on the market. For grapes, due to the length and severity of the spring frosts, overhead sprinklers would be required, as wind machines can only cope with frosts to -3C, dependent on the inversion layer. With the grape vines being closer to the ground they are more at risk than apples.
Wind – far stronger. The existing orchards are planted in the lee of massive old pine shelter belts.
Temperatures – Summer temperatures can be higher; often temps over 30C for longer periods than on the Heretaunga plains. A higher level of irrigation is required during these periods of heat stress good for grapes, not for apples.
Harvest dates – at least 10-12 days later than Heretaunga. Hawke’s Bay’s major apple producers have learnt to manage and work to the conditions, producing high quality apples with high brix, pressure and excellent texture. They have the Ruataniwha as part of a production mix which includes Heretaunga and Nelson – by having a spread of locations they can guarantee their customers fruit every year.

Infrastructure critical

Packhouses and coldstores. New growers often overlook this critical need to handle their crop … and just plant. When their first crop is on the trees, they then look for a packer/exporter. For any grower looking at establishing an orchard on the Ruataniwha plains, their due diligence must include who will pack the crop and where. Given the huge number of apple trees being planted in Hawke’s Bay, unless there is serious capital investment in packing and storage facilities, there will be no home for the fruit.

In the 70s through to the mid-90s, apples sometimes never saw a coldstore until they were loaded on a ship and it was half way to Europe before the fruit came down to temperature. At its destination, the fruit could be best described as pedestrian but the market took it, as there was a shortfall of apples.

Times have changed with international competition from Chile, South Africa and Argentina. New Zealand was forced to lift its game or fall by the wayside. The cool chain is now so entrenched that the growers of today would never dream of leaving their harvested fruit in bins under a cover over night or longer. Every day the fruit harvested is straight into coldstore; often twice a day pickups are the norm.

Packhouses are more sophisticated. The harvested fruit comes into temperature controlled harvest bin stores, then into the packhouse into cartons, then into a packed carton store ready for export … mostly in pre-cooled containers. This all happens under one roof, which means that from the tree to the offshore consumer, the apple is held at optimum temperature ensuring that the consumer purchases an apple that excites them, encouraging repeat purchase.

Sizing up the risk/return

For the new entrant to set up their own white-walled packhouse/coldstore complex would cost into the millions. Add the cost of land, tree, posts, wire, irrigation, frost protection and – in the case of Ruataniwha, hail netting – then wait for up to seven years for a profitable crop. A prospective orchardist would need to have done the most rigorous due diligence before the first tree was planted!

It could be argued that despite the benefit of cheaper Ruataniwha land, given its limitations, the more expensive Heretaunga land would be a more secure option.

The cost, land included, of establishing an apple orchard on the Heretaunga plains is in the vicinity of $200,000 per hectare. The Ruataniwha plains land could be cheaper, but the higher ongoing costs and risks associated with crop protection there may outweigh that establishment benefit.

The real opportunity that we have is early into the Asian market with the improvement in fruit handling and storage areas north of Heretaunga. Apples grow well there and ripen earlier, but under the old laissez-faire approach to handling and storage they had a reputation for poor out turn.

This has changed. Maybe this would be a better option for the new grower to investigate. At the early end of the season there is far less pressure on handling systems with existing facilities on the Heretaunga plains and there may be packhouses prepared to handle this early fruit.

Take the Patoka area for example – higher altitude, which always gives high quality apples, brix, pressure and colour; some easy country; suitable free-draining soil, in a good rain shadow; and excellent winter chilling. Some risk of hail but probably no worse or better than the Heretaunga plains. Plus good roads to Napier Port, and land prices probably similar to the Ruataniwha.

As for grapes, temperature recorders set all over HB by a qualified advisor some 20 years ago came up with the Rissington area as a potential prime growing area.

If I were investing in new plantings today, I know which direction my capital would go.

The apple industry has gone though highs and serious lows and this will happen again. The industry is riding high at the moment, but it could be best described as a fine balance between modest profit on the orchard to serious loss. In the end it all comes down to the returns risk.

David Cranwell

David Cranwell
Apart from his continuing involvement with apples and grapes, David Cranwell since 1994 has raised money for a conservation trust in northwest India.

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