September 27, 2019

By Lynda Kiernan

Seeka Limited, a Te Puke, New Zealand-based company that is the largest grower of kiwifruit in the country, and is a provider of orchard leasing management and post-harvest services, has agreed to sell another of its properties – a 20 canopy-hectare kiwifruit orchard for NZ$15.5 million (US$9.75 million) to Boosters PLPP.  

Under the terms of the agreement, which is expected to close on September 30 of this year, there is also the possibility of further payment (of up to NZ$1 million) in five years, based on the meeting of certain production benchmarks.

The parcel was originally part of the KeriFruit Farm orchard acquired by Seeka from T&G global in April, 2018, before being converted to produce Zespri SunGold kiwi this year.

As the sole investment of the recently listed Private Land and Property Fund, the orchard is being leased back for a fixed rate by Seeka, who will manage the orchard and use the proceeds from the sale to pay down debt, and to fund its ongoing infrastructure development project at its Waipapa Road Post-Harvest facility.

“The sale releases capital, repays debt and secures supply,” said Michael Franks, chief executive, Seeka. “Importantly, it also introduces PLPP and Booster as exciting strategic partners to Seeka, with a number of the varieties targeted by PLPP and Booster fitting Seeka’s portfolio. The relationship potentially allows for considerable future growth through gold kiwifruit development of currently unplanted land included in the sale.”

This deal structure is reminiscent of the deal structure that was seen in November of last year when Seeka agreed to sell five of its Northland portfolio kiwi orchards for NZ$15.9 million (US$10 million).  

The orchards in question were part of Seeka’s Northland portfolio, which the company announced it was selling in July 2018. The nine orchards collectively total 288 hectares, including six that were acquired by Seeka from T&G Global only months before in April 2018. Four of the orchards sold through this deal were acquired by Seeka from T&G through this transaction.

For Seeka, which operates through three business units: Orchard Operations, Post Harvest Operations, and Retail Service Operations, the Northland region where the T&G orchards and post harvest assets exist is one that has been identified as a high growth area for both kiwifruit and avocados.

Demand for New Zealand avocados has soared to a point that last year the price for a single avocado reached NZ$7 (US$4.40). And on the supply side, nursery owners were managing long waiting lists for avocado saplings, according to Vice. Even worse, the situation descended to the point of the development of a black market that drove a crime wave in the country, where avocados were being stripped from orchards and stolen from retailers. 

This year prices continued to soar to record highs of NZ$5.93 (US$3.73) per fruit in May before falling back to NZ$2.99 (US$1.88) in June. 

Kiwi production in the country is also set to continue its rise, after Zespri granted an annual quota for new licenses for 700 hectares of gold kiwifruit and 50 hectares of organic gold, of which more than half are for new project development for the 2019/2020 season, reports Fresh Plaza.

With demand looking to remain strong, established orchards growing gold kiwifruit are selling for NZ$1.2 million (US$750,000) per canopy hectare, and those growing green kiwifruit are selling for up to NZ$500,000 (US$314,000) per canopy hectare.  Meanwhile, suitable parcels of bare land in Bay of Plenty are selling for upwards of NZ$200,000 (US$125,800) per hectare.

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.