Hawke's Bay vegetable growers on the hunt for higher value crops after McCain closure

A group of Hawke's Bay vegetable farmers are trying to work out what to grow after a feasibility study found they should avoid a McCain-style large scale model again.

McCain's closure of its frozen vegetable processing factory in Hastings impacted 100 farmers across the region and a group of growers looked at taking the factory over, but the company sold its processing equipment.

The group embarked on a feasibility study, with $50,000 of government funding, which confirmed there were still domestic and international market opportunities for processed vegetables grown in Hawke's Bay.

But it said further work was needed to determine whether they could become viable commercial propositions.

"However, recreating the previous large-scale processing model is unlikely to be commercially competitive, given lower-cost imports and New Zealand's higher energy, labour and freight costs.

"The strongest opportunities appear to be in higher-value and speciality products, where New Zealand-grown vegetables can compete on quality, provenance and other points of difference rather than price alone," said the report.

It stated that "potential export opportunities have been identified", particularly where New Zealand's quality and counter-seasonal production offered an advantage.

Central Hawke's Bay farmer Sam Reynolds was part of the group, as he used to grow peas for McCain. Since McCain closed he's growing forage crops for the sheep, beef and dairy sectors.

"Luckily the industries in a pretty good place because of the alternatives there, but that's not always going to be the case," said Reynolds.

The feasibility study found a key threat to growing and processing cheaper foods in New Zealand, such as frozen vegetables, was the ability for companies to import them at a fraction of the price.

"It is hard to compete with countries like China and India where they get government support to build factories.

"India in particular has spent a lot of money on cold store infrastructure and cold chain infrastructure so those imports are possibly only going to get cheaper," said Reynolds.

The group of growers wanted to proceed to Stage 2 of the study - which would test three potential opportunities: higher value processed vegetables for domestic food service and specialty markets, export opportunities for frozen peas and value added processed vegetable products for export.

This second phase would cost about $130,000.

"A bit of government support for another study on different opportunites for us would be helpful because it does look increasingly likely we are not competitive in the frozen vege market anymore.

"We've got good land, we've got good water and a lot of sunshine but we just need to think of different things to grow with it," said Reynolds.

Arable sector at a 'crisis point' says farming leader

Central Hawke's Bay grower Hugh Ritchie was also on board. He's farming 2000 hectares near Otane and half of it was growing a big variety of crops - from rocket and carrot seed to soya beans and ryegrass.

Ritchie had been farming for decades and seen many of the sectors ups and downs.

"Not only Hawke's Bay but if you look at the arable industry in general in New Zealand it is at a crisis point," he said.

About a quarter of his business was in growing peas, corn and carrots for McCain, and he told RNZ the study was clear in its findings that growers must seek out higher value crops.

"It's more intensive and it's more complex farming, but if the value is right then it works.

"You know we aren't the prairies of Canada or Western Australia and growing cereal crops ... we are smaller areas and we have to play to our strengths," he said.

But just what these future crops were for Hawke's Bay farmers remained a mystery - although the study found there's a bit of pressure to find a solution before Hawke's Bay lost more of its vegetable growing and processing capability.

Ritchie said if growers were serious about establishing a commercially viable business opportunity, then they needed to be willing to invest.

"If we're not prepared to help ourselves then you can't expect someone else to help ... so growers - if we want to try and have an alternate and come up with alternative strategies then we need to be prepared to go and help ourselves."

The report stated that growers were not asking for a commitment to build a new processing facility, but support to establish whether a commercially viable business could be developed.

"Beyond the regional economic benefits, retaining domestic processing capability would support New Zealand's food security and reduce reliance on imported vegetables," it said.

Minister Todd McClay told RNZ the government was open to supporting the next stage of the feasibility work and would make a decision about additional funding before the end of the year.

"This has been a difficult period for Hawke's Bay growers, and I understand the uncertainty many are facing.

"The report is a useful piece of work. It sets out clearly both the challenges and the opportunities for vegetable processing in the region," he said.

McClay said New Zealand did not apply tariffs to imported frozen peas, beans or carrots before its agreements with China or India.

"Trade agreements are vital to Hawke's Bay. The region's total exports are around $3 billion a year, and they are a direct result of our many trade agreements. Nearly one in three jobs in the region depends on exports.

Hawke's Bay exported up to $1b of goods to China each year, and the India agreement was expected to add as much as $300 million."China is also one of the largest buyers of New Zealand frozen vegetables. Last year it took around $32 million, almost all of it peas."

New seed procesing facility for Central Hawke's Bay

The region was set to benefit from a $3m government investment in a new grower-led seed cleaning, processing and storage facility in Central Hawke's Bay.

Associate Regional Development Minister Mark Patterson said this positioned Hawke's Bay as a key hub for high-value seed production and would help support future growth in the sector.

"Currently, much of the seed grown in Hawke's Bay that requires specialist cleaning and processing is sent outside the region, including to as far away as Canterbury, before it can be sold domestically or exported. This adds cost, creates inefficiencies, and reduces returns for local growers," he said.

Patterson said the new hub would bring the full seed value chain together in one location, from drying and cleaning through to processing and storage.

"It reduces the need to transport seed outside the region for processing, meaning growers can retain more value locally while improving efficiency and resilience across the sector," he said.