NZ tomato growers face rising energy costs

Tomato growers rely on various forms of power to heat their glasshouses and Dr Barry O'Neil, the chair of Tomatoes NZ which represents growers, says energy costs make up a third of their total cost of production. He says as well as paying for the actual power, being a producer, they have a pay ETS costs associated with the energy they use.

"We've been on a journey to decarbonise out of coal and moves to renewables, but it takes time and capital and it's very difficult for some of our growers to pivit into renewables," O'Neil told Hort News.

"We have got the immediate urgency of the gas prices as a result of the gas fields starting to fail, so gas prices with some growers may have a contract of say $10 per gigajoule, but this would be going to $30 dollars a gigajoule - three times increase in gas prices," he says.

Changing to different energy sources requires a change in boiler type, says O'Neil. He says the capital cost of doing this is out of the reach of many small growers. He says in terms of options, the industry is at a bit of a crossroads as to what the options are for the future.

"Geothermal is obviously an attractive heating option, but the cost of relocating from your current location to say the central plateau, and then to drill or access an existing geothermal bore requires a huge investment. You'd have to build new glasshouses in the process of any move as well. Then there is cost of getting product to market," he says.

Given this uncertainty, there is the further risk to the industry and NZ consumers relying on imports of tomatoes from places such as Australia which don't face the same energy challenges that NZ faces. For example, tomatoes are grown outdoors in place such as Queensland and of course the cost of production is lower. At present, tomato imports from Australia are suspended due to an outbreak of brown rugose fruit virus.

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Help Industry Decarbonise

Barry O'Neil says the energy crisis is a hugely challenging issue for tomato growers. Changing locations is challenging with a modern glasshouse costs $3 million a hectare.

He says should growers move to another region, they face labour challenges - especially in say the central North Island. He says the situation there is quite different to Pukekohe which is closer to a bigger city and has a large pool of labour.

"One of the biggest arguments with successive governments has been with the ETS charges we have to pay. In our view, the tax we pay should be recirculated back to the industry to assist us to decarbonise and move to more renewable forms of energy. This has been an ongoing conversation with the previous and this government," he says.

O'Neil says some of the smaller growers are currently using recycled oil, but others have stopped their heating or are heating less, which means they are producing less. This shortfall in production, he says, will see the price of tomatoes in winter increase.

Some of the larger growers are cutting back production while others are moving away from growing tomatoes and planting cucumbers which require less energy.

While the price of electricity is high, there are other problems with this power source, according to O'Neil.

"Often the transmission power lines in some locations are simply not big enough to take the energy to heat large glasshouses," he says.

The options with renewable energy such as biomass - mainly woodchips - is an option if it's available and reasonably close to a glasshouse operation, in order to be cost effective. As O'Neil points out, you don't want to be trucking it hundreds of kilometres to your operation.

Recently tomato growers met in Pukekohe to discuss the problems they are facing. O'Neil says the various energy suppliers made 'pitches' to the group but he says there is no immediate standout solution and he reiterates that the industry is at a challenging crossroads.