The extent of the damage to kiwifruit production in the Italian region of Lazio caused by a recent canker outbreak has become clearer following the admission by New Zealand's largest kiwifruit grower Seeka Kiwifruit Industries that it expects to record a loss on its investment in one of the affected orchards.
The announcement, submitted to the New Zealand Stock Exchange this morning, follows an apparent decision by New Zealand firm Opotiki Packing and Coldstorage (OPAC) – in which Seeka has a 19.2 per cent stakeholding – to write off its Lazio-based 84ha Newgold orchard, which is currently planted with the Zespri Gold kiwifruit variety Hort 16A.
OPAC advised Seeka that the full cost of the investment should be written off because the orchard had suffered "a continuing outbreak of a bacterial disease". The disease in question is Pseudomonas syringae pv actinidiae, otherwise referred to as kiwifruit canker.
As a result, Seeka said it expected to make a loss of no more than NZ$1m (€530,000) on the project for the year ended 31 March 2010, adding that any impact would be in non-cash form and would not affect the company's current banking and loan arrangements.
"The Newgold orchard investment has a carrying value at 31 December 2008 of NZ$7.16m (€3.79m) in the OPAC financial statements," Seeka said in a statement. "The OPAC Board has determined that the full cost of this investment should be written off and this is likely to result in OPAC recording a loss for the financial year ended 31 December 2009."
OPAC established a 50/50 joint venture back in 2000 with Italian supplier Salvi, one of New Zealand kiwifruit marketer Zespri's four partners contracted to grow its Gold kiwifruit.
With 79ha under production, the Newgold joint venture produced almost one million trays of Gold kiwifruit in 2007.
Seeka chief executive Michael Franks said the companies would continue to manage the disease at the Newgold orchard with the hope of continuing the venture.
Meanwhile, he told reporters that Seeka's operational earnings would not be affected by the write-down, withearnings for the financial year still expected to be in the region of NZ$6.9m-NZ$7.5m (€3.7m-€4.0m).