Land that was once called marginal and unproductive now holds the hopes of an entire region as a $30 million investment into kiwifruit takes place on the east coast of the North Island.
The development of 90ha of kiwifruit orchards on Maori land in the eastern Bay of Plenty and Gisborne is the single largest kiwifruit investment ever made on Maori land, and aims to create successful grower businesses for the long-term benefit of owners and their community.
Te Tumu Paeroa, an independent organisation that supports Maori landowners to make the most of their land, contributed half the investment capital and created a unique business model to establish new enterprises on Maori land.
Te Tumu Paeroa will lease the land and develop the 10 orchards, keeping the profits, but in around 12-17 years, after achieving a targeted rate of return on capital invested, full ownership of the orchards will be transferred to land owners.
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In the interim, the land will be leased and Te Tumu Paeroa will build and operate the high-performing businesses, carrying the financial risk.
By creating this business model, it addressed the fears of the Maori landowners that they could potentially lose their land if they put it up as security.
“It allows us to achieve the objective of developing the land whilst ensuring owners aren’t exposed to risks they’re not comfortable with,” Jamie Tuuta says.
“It’s difficult for Māori land owners to develop businesses on their land unless they have access to capital from other means, because many don’t want to use the land as security on a loan. As a result, owners usually contract out the land to businesses who do have access to capital and can reap the financial rewards for taking the entrepreneurial risk. Māori land owners are missing out. Our programme addresses that, putting businesses in the hands of land owners.
“Our programme allows land owners to participate in developing a successful kiwifruit orchard on their land and see the ownership of the business transfer to them by 2030, creating a legacy for generations to come.
“A core part of our programme is building the capability of land owners to successfully govern the business when it comes time to transfer ownership to them. We want to see Māori land owners involved in the whole process — developing skills and hands-on experience in running kiwifruit orchards on the ground as well as in the boardroom.”
Te Tumu Paeroa piloted the investment model with two orchards in the Bay of Plenty planted last year – Te Uretureture on Matakana, and Omaio 39, which was launched on April 21 at Otuwhare Marae at Omaio Bay.
The 9ha of kiwifruit in total, which are managed by professional kiwifruit management companies Southern Cross Horticulture and OPAC, will have their first harvests in 2019.
Te Tumu Paeroa has identified 10 blocks of land in the Bay of Plenty and Gisborne, where high-value horticulture is the highest and best use for the land, and which have the characteristics that would make it a successful kiwifruit orchard: a suitable climate (not too windy or frosty), high quality soil that can hold a lot of water and minerals, flat land, access to water, and access to supporting services such as packing companies.
It has also considered the environmental impact different crops have.
“We are running a series of hui with owners of the blocks we’ve identified for the programme to discuss the details of the proposed development – covering everything from how the orchard will be built, how much it will cost, how the business will be run, and all the financial details,” Te Tumu Paeroa communications and marketing manager Sara Passmore says.
“We’re carrying out these meetings out over a 4-6 month period, so that nobody feels pressured – and all matters can be properly considered and debated before they make a decision about participating in the programme.”
It expects to be able to name the land blocks in a few months’ time when building is set to begin.
The investment arm of the Bay of Plenty Regional Council, Quayside Holdings, have also invested in the orchards.
“Seeing the opportunity of Maori land is a significant step toward the growth of Quayside, as well as the growth of the region where we can create jobs and other opportunities,” Quayside Holdings chief executive Scott Hamilton says.
The 10 kiwifruit orchards are planned for development over the next 18 months, and by 2030, based on today’s return, the orchards are expected to generate over $80,000 a hectare a year or $7.1m by growing a mixture of premium gold kiwifruit and traditional green kiwifruit.
However, Tuuta is quick to point out that the benefits of the programme are far more than just financial.
“It will enable owners to reconnect with their whenua and support them to achieve their long-term aspirations for their land,” he says.
“For example, as part of the redevelopment of their land and the building of the orchard, owners of Whai Orchards, established on Te Uretureture , Matakana, have set up a Maori reservation to restore historic pā sites and established an urupā (cemetery).”
It is also expected to have a positive impact on local residents, in terms of employment, wealth and pride.
Tuuta is confident kiwifruit was the best choice for developing the land, both in terms of environmental suitability and potential growth.
“Kiwifruit is a thriving industry with a very positive, long-term growth trajectory,” he says. “It’s also a fruit which growers can delegate the services for production and marketing to others, which is critical for owners who are not kiwifruit growers already.”