US tariffs and shipping delays push NZ apple exports to Asia
A Hawke's Bay apple grower says it's no longer profitable for him to export apples to the US because of the 15% tariff imposed on them by Donald Trump.
He says the remedial work includes planting new trees and dealing with some surprising things - namely random willow trees that have popped up in among the rows of apples.
The fifth generation family business, the Yummy Fruit Company, lost 180,000 apple trees in the cyclone, most of which were in the Esk Valley north of Napier - one of the worst hit areas. Paynter says they were not able to plant again in that area because banks and financial institutions will not lend money to plant in areas still a risk of flooding - Esk Valley being one such place.
"So, it's a big challenge and we still haven't stopped spending money to get it right," he told Rural News.
"The problem is that with an apple tree, it takes a couple of years to grow a nice nursery tree and pop it into the ground and then you have about four years after that until cashflow breaks even. In effect it takes between six and seven years to get yourself in a better position than you were previously in."
Paynter says the big fear is running out of money and it's no surprise that banks are keen to reduce exposure to the sector as a whole and to individuals in the region. He says his company is still struggling and hasn't made a significant profit since Covid; if they had, it would be a very small one.
"We have had five dire years and it's difficult to survive these days with the banking regulations that are less tolerant of business that have non-performing loans. It's a tough world but it's only a downturn and we have beaten our budget the last two years, and we have got a very good trajectory for the future," he says.
Read More:
- US tariffs and shipping delays push NZ apple exports to Asia
- Cyclone-ravaged orchardists facing balance sheet woes
- Long-term worries for Hawke's Bay growers
The Yummy Fruit Company only leased land in the Esk Valley and Paynter says much of that land is being used for cropping. He says the problem for growers like him is assets have decreased in value and debt has gone up. He says there is a fear that some businesses will not survive. He says things are in place where, in a normal year, his company would make a profit.
For him and other growers, the big challenge will come in a few years' time, at which stage they'll be looking for extra capital for the future. Paynter says despite the challenges, he's excited about the future with the innovation and new plantings that have gone in and he adds, the future looks brighter than it's ever been.
