Some red, some gold. Some existing orchards, some new. The primary driver of investment returns is cash yields delivered by the orchard over time. Once the orchard is producing fruit, we only retain working capital and pay out the rest.
Investment will be through a Limited Partnership that will own the orchard and associated assets, plus any Zespri shares purchased. Ownership of the Limited Partnership will be circa 15% Dunstan Group and 85% co-investors. SCH will purchase Zespri shares for Hereford Park investors as and when this makes sense.
SCH is seeking a core group of long-term co-investors who share our purpose, mission and values to participate in the project.
Site planning is advancing.
Earthworks consenting underway.
We will bid for Zespri licence in April 2022 and April 2023.
It is assumed that the orchard will be developed in three stages, to be planted as follows:
SunGold stage 1 to be planted in January 2023;
SunGold stage 2 to be planted in July 2023;
Zespri RubyRed to be planted in January 2024.
First crop of SunGold will be harvested in April 2025.
First crop of Zespri RubyRed will be harvested in April 2026.
Our strategy is based on achieving strong cash yields over a long-term investment timeframe. Depending on planting schedules, we aim to produce commercial crops from as early as 21 months from planting, and our crop yields typically out-perform the industry average by a substantial margin both in terms of production and in terms of Orchard Gate Return. The returns we achieve compare favourably to most agri-business opportunities.
Investors will also become eligible to own Zespri shares (exclusive to kiwifruit growers and orchard owners) which themselves generate good returns, and we often acquire these shares as part of our investment projects.
Some investors may also benefit from tax efficiencies in the early years of establishment.
While our main focus is on creating a quality land-based asset that generates cash yields, the capital value of the orchard can also increase over time. The value of New Zealand kiwifruit orchards has increased substantially in recent years, particularly SunGold orchards, supported by Zespri’s strategy for limited release of kiwifruit licences in order to manage supply and demand.