NZ Cold Storage Association Conference 2016 Alan Pollard Chief Executive Officer Pipfruit New Zealand Incorporated

Future shock – acceleration of change Could easily apply to the apple industry Experienced some very low times; experiencing some very high times Huge changes afoot

Industry timeline 1814 apples introduced to NZ by missionaries led by Reverend Samuel Marsden 1899 first trial shipment of apples to UK in cold storage 1916 NZ Fruitgrowers Federation formed 1920 NZFF obtains government guarantee of 1d per pound against export losses 1926 Fruit Export Council formed (selling agent in market) 1939-45 WW2 decimates apple exports (57m pounds to zero) 1948 NZ Apple & Pear Marketing Board formed (single desk exporter) 1963 Domestic supply of apples deregulated 2000 NZAPMB/ENZA corporatized 2001 Exports of apples deregulated 2005 industry hits hard times 2008 Apple Futures 2012 Good times ahead 2015 Apple Futures 2

Historic data 1925 1955 1975 1995 2001 2005 2010 2015 Growers 1,489 720 742 1,600 1,200 650 327 Exporters 1 86 84 Pack houses 180 125 85 61 Planted area 5,511 2,800 5,202 15,916 13,890 13,495 9,061 9,308 Gross volume 28,364 46,941 159,403 527,000 473,000 565,165 Export volume 3,859 17,454 79,713 302,415 261,000 322,185 265,492 315,000

Regional industry 1925 1949 1973 1985 1995 2005 2015 Hawkes Bay 8% 17% 26% 39% 40% 55% 64% Nelson 37% 42% 36% 29% 22% 27% Canterbury 10% 6% 5% 13% 2% 0% Otago 16% 11% 9% Other 20% 23% 21% 4%

Export Destination 2005 2015 Asia 13% 41% North America UK 20% 15% Other Europe 50% 24% Other 4% 7% Exports 66% 59% Domestic 12% Processing 27% 29%

NZ Industry Situation Outlook YEAR EXPORTS (MT) FOB VALUE (million$) PRICE MT 2012 288,930 $341.6 $1,182 2013 324,686 $475.3 $1,464 2014 316,284 $536.4 $1,695 2015 315,000 $556.3 $1,766 2016 351,000 $700.0 $1,994 % change 21% 105% 68% Of the $358m increase $73m is due to volume and $285m due to value Volume extracted by commercialisation of new exclusive varieties; world leading on orchard practices that deliver quality, taste, safety; high quality trade and market access

NZ Industry Situation Outlook World apple ranking 2016: # 1 New Zealand # 2 Chile # 3 United States # 4= Italy # 4= France

NZ Industry Situation Outlook World apple production 2015: # 1 China at 43m tonnes # 2 United States at 4.5m tonnes # 3 Turkey at 2.7m tonnes # 4 Poland at 3.2m tonnes # 5 Italy at 2.2m tonnes NZ 0.56m tonnes

NZ Industry Situation Outlook World apple export value 2014 ($US): # 1 United States at $1,088m # 2 China at $1,027m # 3 Italy at $975m # 4 Chile at $822m # 5 France at $719m # 7 New Zealand at $433m

NZ Industry Situation Outlook Productivity 2014: # 1 New Zealand at 61.0 tonnes/hectare # 2 Chile at 41.3 tonnes/hectare # 3 Netherlands at 40.7 tonnes/hectare # 4 Belgium at 40.6 tonnes/hectare # 5 Italy at 39.3 tonnes/hectare

NZ Industry Situation Outlook Residues: Lowest of any country Response to NGA pressures in Europe 2012 USDA report 21 times less that US fruit 42 times less that Chilean fruit

NZ Industry Situation Outlook Long term crop estimate Gross Crop (mT) 2015 2016 2017 2018 2019 2020 Hawkes Bay 381,590 382,132 397,989 409,360 432,371 456,275 Nelson 145,479 142,565 143,559 146,012 152,326 156,888 Otago 15,882 16,644 16,980 17,688 18,482 19,078 Other 20,511 21,573 21,970 22,159 22,107 22,240 Grand Total 563,462 562,914 580,498 595,219 625,286 654,481

Core Strategic Priorities Market Access Highest quality market access Focus on quality, taste, safety Europe about residues Asia about pests and diseases Prioritisation model Governance and technical structure Partnership with MFAT, NZTE, MPI Market development work Apple story India World Bank project China partnership with PFR Japan exchange Korea connection with domestic industry Trade policy/FTAs

Core Strategic Priorities Relationships MPI, MFAT, NZTE, MBIE, MSD Horticulture NZ Other industry sectors – Kiwifruit, avocados Industry partners Collective wisdom and strength Common interests

Core Strategic Priorities Apple Story We don’t tell it enough Powerful story Broad audience Differentiator Name and brand

Core Strategic Priorities Information Vast amount of industry data Right information to right person at right time in right way to do right job Real time on orchard Must be easily accessible and professional Intelligent tools

Core Strategic Priorities Recognised Seasonal Employer Scheme Pacific Island aid programme 9,500 nationally, 5,500 in pipfruit industry Transformed our industry Transformed Pacific Island communities Defined harvest window Balance between opportunities for New Zealanders and RSE workers

Core Strategic Priorities Attract retain and grow talent Primary sector needs 25,000 more jobs by 2025 Pipfruit sector needs 4-5,000 more in next 4 to 5 years Horticulture as a credible career option Rise of vertically integrated businesses Roles and skills analysis Engage with primary and secondary schools, tertiary institutions and work places

Core Strategic Priorities Access to new varieties World leading plant breeders NZ exclusive varieties Premium market position Anticipate future consumer preferences

Core Strategic Priorities Biosecurity Protect our borders Be prepared Government Industry Agreements

So where to from here $1 billion in export returns by 2020 Long term sustainably profitable and growing industry Increasing share in Hawkes Bay Continued growth in Asia Exemplar industry organisation People want to work with us Continue to push scientific boundaries

Risks Used to be market access Now Biosecurity Weather Infrastructure i.e. cool stores

Thank you

NZ Cold Storage Association Conference 2016 Alan Pollard Chief Executive Officer Pipfruit New Zealand Incorporated