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Processed Vegetables

Industry profile

There are approximately 900 process vegetable and 130 process potato growers in New Zealand. The main growing regions are Gisborne/Hawkes Bay, Marlborough and Canterbury. The principal crops in order of tonnage are potatoes, sweet corn, peas, tomatoes, carrots, beans and asparagus. The minor crops are beetroot, kumara (sweet potato), cauliflower and broccoli. Production figures for the principal process crops are:

• Process potatoes 262,500 tonnes
• Sweet corn 100,000 tonnes
• Peas 58,900 tonnes
• Tomatoes 45,000 tonnes
• Carrots 60,000 tonnes
• Beans 11,500 tonnes
• Asparagus 800 tonnes

Growers and processors

Recent seasons have produced reasonable yields on most process vegetable crops. However considerable pressure has been brought to bear on growers particularly for peas, carrots and beans with significant reductions in areas planted and reduced prices. There is also price pressure on process potato growers. The farm gate value of the total process vegetable industry including potatoes exceeds $100M.

While it appears there have been increasing FOB returns for our major process vegetable products, returns to growers have reflected the fact that much of the product is still commodity trading and there is a definite relationship between price and volume. When there have been difficult trading conditions, processors have asked growers for understanding and to work together. However now that export market returns have improved this approach has disappeared.

Agronomic practices have changed for the better but returns per hectare have remained static.

Three HortNZ Product Groups are involved in process vegetable (excluding fresh prepared) crops: Potatoes New Zealand for potatoes for processing, Asparagus Council for asparagus and Process Product Group for the remainder (predominantly: sweet corn, peas, beans, carrots, beetroot and kumara and excluding processed tomatoes). Process tomato growers have limited their funding and involvement in HortNZ to  generic activities only. This does not include R&D.

Processing companies

There are four principal processing companies: Heinz Wattie's Australasia Ltd, McCain Foods (New Zealand) Ltd, Talley Frozen Foods Ltd, Cedenco Foods Ltd. There are approximately seven or eight other minor vegetable processors and about the same number of potato processors. The market share of the five principal processors are: McCains 40% Heinz Wattie's 30%, Talleys growing to just under 20%, Cedenco  5%. Some of the smaller processors are particularly efficient and effective, particularly in process potato products and asparagus and herbs. The major potato crisp processing companies are ETA and Bluebird and both companies each source all their potatoes from a single supplier.

Heinz Wattie’s Australasia operates plants in Hastings and Christchurch. Both are vegetable processing plants. Heinz Wattie’s has the only vegetable canning line in NZ at Hastings and a dehydration plant in Christchurch.
McCain Foods (NZ) Ltd has plants in Hastings and Timaru. The Hastings factory processes vegetables while the Feilding and Timaru factory processes potatoes.

Talley Frozen Foods Ltd has plants in Ashburton & Blenheim. The Blenheim factory processes vegetables and the Ashburton factory processes potatoes and vegetables.

Cedenco Foods Ltd is based in Gisborne & processes sweet corn, peas & tomatoes along with some other vegetables; e.g. squash. It is the principle producer of sweet corn powder in New Zealand and now processes and produces frozen sweet corn and peas on contract for Heinz Wattie's Australasia. Cedenco recently went into receivership but growers continue to grow for the company until a new owner is found.

Potatoes

The process potato industry is experiencing significant growth due to increasing demand for value added products. Demand for quality potatoes from the process industry has put pressure on growers to support either the fresh or process markets. Exports of processed frozen potato products have almost doubled in the last two years to reach 30,000 tonnes with a value of more than $50million. Both processing companies and growers are committed to R&D activities to enhance the quality of their products. The increasingly quality conscious fast food and convenience food sectors have put pressures on processors to supply first grade products, hence the need for the industry to invest in R&D activity.

Peas

The production of peas in New Zealand has a long history, closely associated with the development of the process vegetable industry. Frozen peas now represent New Zealand's third largest vegetable export with over 35,000 tonnes being exported earning more than $50 million. This excludes peas exported as a component of frozen mixed vegetables.

There are also significant volumes of dehydrated peas exported and a small volume of canned peas. Process peas are exported to about 40 different countries, the major markets being Australia, Japan, United Kingdom and Taiwan. In the past eight years the FOB value of process pea exports has increased by over 40%.

New Zealand markets peas internationally and production and processing costs in New Zealand are internationally competitive. R&D activity is focused on improved pest and disease management, the development of IPM/reduction in agrichemical use and new and improved cultivars.

Sweet corn

Sweet corn production in New Zealand is a large and established industry which has seen an expansion in the volume of sweet corn grown for freezing in recent years. Production levels are however, heavily dependent on export markets. There are a variety of uses for the product but over 75% of the crop is frozen both in cob and kernel form. While New Zealand markets its frozen sweet corn internationally to over 30 countries, the major export markets are Japan and Australia. It is the fourth largest vegetable export in excess of 25,000 tonnes exported earning about $50M. About 6,000 tonnes are converted into corn powder mainly for export.

Carrots

Carrots are one of New Zealand's fastest growing vegetable exports and apart from fresh include frozen, dehydrated product and juice concentrate. The main export market is Japan. This crop has expanded in an daround South Canterbury to now process 60,000 tonnes annually

Tomatoes

The growing of tomatoes for processing into paste is now largely concentrated amongst a small group of large growers in the Hawke’s Bay who produce 35,000 tonnes. However, Cedenco in Gisborne has also recommenced processing about 7,000 tonnes of tomatoes for paste.

Summary

As producers, New Zealand's process vegetable and potato growers are among the most efficient in the world at producing low cost vegetables of high quality. However, many of these growers question the returns they are achieving for what they produce. There has been major restructuring within the processing industry in recent times and the hope is that this will lead to more efficiencies within the processing companies and better returns for growers. The predominance of overseas ownership and shareholders may have an adverse impact on the expected gains.

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