ENZA Foods Upgrade

May 2013

Turners & Growers' ENZA Foods continues to innovate, upgrade and expand

Enzafoods is spending $6.5million to upgrade its Hastings factory to produce more apple products and export more and at the same time, some apple growers are now only producing process fruit for Enzafoods in the “Grow for Process” programme.

This year is the 50th anniversary of Enzafoods, which started in 1962 as the NZ Apple and Pear Marketing Boards’ processing arm in Nelson. The company is now wholly owned by Turners and Growers.

Until recently Enzafoods’ Hastings factory, built in 1973, only produced juice and juice concentrate. In Nelson the factory produced canned apples and converted in 2001 to pouch production, also producing sliced or diced apples.

Demand for the products, now produced under the Freshfields brand, has increased so much that the Nelson factory could not meet all the requirements so they decided to build a brand new plant in Hastings to cope with demand, investing $6.5 million in a two stage process.

In 2011 they added an apple sauce line to the Hastings factory, which was the first stage in a major upgrade. Last year this factory produced 2200 tonnes of apple puree for baby food, sauce and other food ingredient uses.

This year a second upgrade was approved to build a pouch production line for 3kg and 7.5kg pouches used for diced and sliced apples. This product goes into the food service market in Australia and NZ.

Before next season they are completing and commissioning the pouch packaging line which can also process pears and other fruit.

The investment has meant 14 new seasonal and full time staff in Hastings. The plant processes organic pipfruit as well as conventional fruit.

Juice concentrate is a commodity item, where prices and returns fluctuate due to world supply and demand and exchange rates, none of which Enzafoods has any control over. As only one in five years tends to be good in a commodity product, Enzafoods wanted to remove the emphasis from juice concentrate and invest in producing value added products.

While value added products take 20% of the apples they process, they return about 35% of the income, giving a very clear message about where to invest.

The added value business is growing steadily into Australia, and Enzafoods are also looking further afield for sales. They want to ensure that the majority of their income is from value added products, which will also ensure that when commodity returns are low they can continue to deliver competitive prices to their growers. They also have to deliver a reliable return to their shareholders each year, and the commodity business doesn’t always do that.

Having more throughput into the value-added business has also enabled Enzafoods to offer a Grow for Process scheme to growers.

This scheme began in 2007 and was greeted with some cynicism by growers because they usually try not to grow process fruit so Enzafoods involved AgFirst to validate the numbers.

The idea for growers is to maximize yield per ha and keep their input costs down. It takes the gamble out of growing apples for export and has the added advantage of fixed pricing with weekly payments and prepayment options to help with growers’ cashflow.

Enzafoods gives cash advances to those growers who need it, and growers are paid within two weeks of submitting fruit. They are then able to cover harvesting costs more easily.

The growers have no forex or market risk and they have a fixed price they can budget on. It is perfect for varieties which have previously lost money on export markets.

Some growers have put all their orchard into the scheme, others their older blocks or varieties that might not sell well, such as Braeburn.

Commodity prices on the whole have been firmer in the last few years than through the 2000’s. Continuing to grow the value added business reduces the exposure to commodity price crashes and means Enzafoods will be able to maintain the Grow for Process scheme.

The growers are paid $0.17 per kilogram, which is a relatively stable price. In 2010 when commodity prices were low this was dropped slightly.

It is possible for growers to produce 80-100tonnes/ha of fruit. For instance Braeburn can produce over two seasons, an average of 160tonne/ha for the highest yielding blocks. This is well above the highest fresh market yields.

Now the Grow for Process scheme makes up 35% of the total volume of fruit being processed. For the 2012 season the scheme took 500ha of the 9000ha of total planted area in pipfruit.

In Hastings 89 growers with 300ha joined the scheme, and in Nelson 43 growers with 200ha joined the scheme.