Hortinvest poised to seize new global markets

Leading New Zealand horticultural investment company, Hortinvest, is poised to take advantage of the world's demand for premium fresh produce as it moves a step closer to realising two multi-million dollar cherry projects in Central Otago.

The Central Otago region - recognised globally for producing New Zealand's best cherries - accounts for some 90 per cent of supply. However, Hortinvest project and orchard manager Ross Kirk said the entire Southern Hemisphere was responsible for only five per cent of global production, creating vast untapped potential for growth in the cherry investment space.

Rising middle class demands fresh produce quality

He said while China was the biggest and fastest-growing global market, with some 400 million middle-class consumers, other markets were rapidly emerging in Asia and Europe.

"Established markets in South-East Asia, Japan, the United States, China and Europe still have enormous growth potential. With emerging markets in India, Vietnam and Indonesia, we're seeing an increasing demand for new tastes and experiences in fresh produce fueled by rising incomes, globalisation and digitalisation," he said.

"The pull from China alone is phenomenal and, as we've learnt, China is not just one market - there are many individual markets within it. However, it is prudent to have a foothold in a spread of markets, as we do. Opportunities for exporters are intensifying and Brand New Zealand is in the perfect position to help feed the world.

"Key trends in health, convenience, natural foods and sustainability and, new foods based on fruits and vegetables, fulfill many of the demands of the premium consumer."

Export prices and on-farm profitability remained strong across New Zealand's horticultural sector, providing an incentive for further investment and expansion, he said.

"While New Zealand cherry volumes fell in the past year, in the medium term, exports are expected to continue the strong growth trend experienced since 2014. Even when volumes were down 40 per cent last year due to frost, New Zealand cherries fetched the highest price per tonne globally. Returns were strong."

World wakes up to horticulture hot-spot

Mr Kirk said New Zealand's horticulture sector was positioned better than ever to build on its global reputation for investment potential.

"We've seen huge multinational companies such as Germany's BayWa invest in New Zealand horticulture in recent years. Locally, large investors such as iwi, managed funds and corporate syndicates are turning to horticulture as a sustainable, high-returning investment for the long-term."

Hortinvest's current $15.5 million cherry projects at Lindis River and Mt Pisa had attracted a range of investors, locally and globally, he said.

"These types of projects are buy-and-hold investments with the ability to generate an excellent passive income, which is why we've had a lot of interest from people with family trusts, people who are succession planning.

"Planting a cherry tree is long term. A tree takes several years to come into production and several more to reach peak production. Managed properly, a tree will continue to produce for up to 40 years. In planting orchards, we're investing in the future of the young people in this country."

He said the Central Otago projects were initiated by traditional beef and sheep farming families seeking to diversify their farming operations.

"Both families came to us because they wanted to diversify into horticulture, reduce risk and generate more value for their families' futures. Both landowners have reinvested and the next generations are set to gain.

"The land for each project will be owned by the development. Both families are fully invested in seeing them come to fruition."

Cherry projects attract major investment group

Hortinvest continued to process applications for the projects, he said.

Expressions of interest for the 80-hectare ventures closed on May 31, with more than 20 enquiries received in the final days.

Mr Kirk said both projects were now more than 40 per cent subscribed as negotiations continued with a large corporate investor which was considering acquiring the remaining units.

"As a number of stakeholders are involved in that investment fund, a decision may take several weeks. In the meantime, other medium and smaller wholesale investors also have expressed interest and are still completing their due diligence. As a result, we've extended our project deadline for all applications until September 27," he said.

Mr Kirk said the first trees for the projects had arrived, with the rest due to arrive in July for planting to begin.

The minimum investment in each project is $100,000, spread over four years.

The projects are expected to harvest the first fruit in 2022. At full production, financial year returns from 34 to 59 per cent are based on 12 and 18 tonnes per hectare.

Additional land is available for future projects which might include blueberry and apricot projects, Mr Kirk said.

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Located in Central Otago, New Zealand, Hortinvest Ltd is the leading consultant in New Zealand's emerging and highly profitable cherry and horticulture industry. Hortinvest employs world-leading orchard management and packhouse systems to produce and export premium New Zealand cherries.

(Issued: July 1, 2019)

Issued by Aqua Public Relations on behalf of Hortinvest Ltd. For more information please contact:

Ross Kirk
Project and orchard development manager
Hortinvest
(02) 7484 5099

OR
Toni Lucke
Aqua Public Relations
+61 7 3312 2505

Email Toni>