Chapter 1: What is the main topic discussed in this episode?
Kia ora and welcome to Shed Lunch. My name is Luke Smith of Sharesies and today we're at Mount Maunganui in the Bay of Plenty talking to Seeker, one of New Zealand's largest horticulture services companies.
Chapter 2: What role does kiwifruit play in New Zealand's economy?
We're going to be talking to CEO Michael Franks about the exciting role that kiwifruit's playing in the New Zealand economy, how players like Seeker play a really key role in the industry, and also trends that we're seeing such as automation. So we're about to go check out some of that at play here at Hookah Pack, one of their packing sites.
investing involves risk you might lose the money you start with we recommend talking to a licensed financial advisor we also recommend reading product disclosure documents before deciding to invest everything you're about to see and hear is current at the time of recording michael to set the scene and as a consumer when we're thinking about kiwifruit it's usually synonymous with zespri
Chapter 3: How does Seeka integrate into the kiwifruit ecosystem?
but understand that there's a lot more players behind the scene. Can you just describe what does Seeker do and how do you fit in the kiwifruit ecosystem?
Yeah, so Seeker's an integrated produce company that's listed.
Chapter 4: What is the process from orchard planting to fruit consumption?
We are the only one that's listed with kiwifruit as our foundation variety. We are a large grower of kiwifruit in New Zealand, mainly through leased and managed orchards. And we've got a network of highly automated pack houses throughout the major growing regions, 11 pack houses in total.
So I've heard Sika described as a post-harvest provider. What does that, for people new to that concept, what does that actually mean? And could you take us to the point of, you know, a tree's planted through to I'm actually enjoying a delicious kiwi fruit and how does Sika fit within that process?
So in our orcharding business, which produces around 40 to 45% of the fruit that we handle, an orchard is planted, the structures are developed, which means the frames that the kiwifruit grows on and any protection or irrigation put in place, those plants are trained through to production. It might take three to five years depending upon the variety.
and then once the orchard is yielding, it moves through to the post-harvest sector.
So the fruit's on the vine, it matures, and the post-harvest effectively arranges for the clearance of that fruit to make sure that it's safe, make sure it's got no residues, make sure it's mature and ready to go, arranges the harvest of that fruit either by the grower themselves or through a service that we might provide. We schedule the reception of that fruit to one of our pack houses,
It is allowed to rest to get the shocker being picked out of its system. And then we will put it across one of our automated packing facilities, grade it into class one, class two, or class three, so for the relative markets. And we'll put that fruit to sleep in a cool store to be loaded out at a time that we are ready. How long does that fruit sit in the cool store?
Well, it depends on the part of the season that we're in. Early in the season, that fruit might only sit in the cool store for a number of weeks. We start harvesting fruit of all types in New Zealand around mid-February with kiwi berry. We will finish harvesting in a normal season in the first week of June. The last of the fruit will load out from our stores sometime in late November.
So we've got to be very good in segregating the product as a perishable to maximise the amount of freight that we deliver to the premium markets in top condition so that the marketer can make the most money out of it.
So we're here at the hookah facility. Can you describe what's happening here and what is the significance of those sites?
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Chapter 5: How is Seeka adapting to climate change challenges?
for 99 years, everything above the ground and all the improvements are owned by us. And this site's going to handle somewhere between four to five and a half million trays of fruit this season.
And scale-wise, can you just talk to us around, in the peak of the season, how many trays are you producing across the country?
So each tray is 3.6 kilos. We will handle at the peak somewhere between 980,000 and a million trays a day of Class 1 product that's been packed and graded into the box. This season we expect to handle somewhere between 45 and 47 million trays and we handled 47 million trays last year.
Where are your operations based? How big is the business today?
Our 11 sites sort of span from Tairawhiti, Gisborne, all the way through to Kerikeri and Taitakura. And across those sites, while we predominantly handle kiwifruit, we are also handling persimmons, citrus and avocados. So there's a lot going on. In terms of scale, today we would have around 3,500 seasonal workers directly employed in addition to our 700 permanents.
Yeah, you mentioned you've got other products outside of kiwifruit. You're also in Australia as well. Can you speak to the reason for starting to diversify? What was the reason of going over to Australia?
We've got a number of parts of the business outside of our core product, which is kiwifruit, including our wholesale marketing operations. and our Australian business. Australian business gives us some geographical diversity, takes us into a different region.
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Chapter 6: What innovations are being introduced at Seeka to enhance efficiency?
It's predominantly Kiwi fruit, but we're also growing European pears, Asian pears, Nashi, Jujubes, and we've got some exciting new varieties that we're trialling over there.
And latest result to 31 December, revenues of $440 million, I think it was. Seems like things are going well. How would you describe how things are going at Secret at the moment?
Well, last year was a perfect year for us. It was a perfect growing season. The volumes were good. Regional volumes were excellent. And we were pretty happy with how the whole season came together in all parts of the business really. Didn't face too many headwinds. This year's a different growing season. We've had a lot of climatic issues, particularly early on, if you remember back to Easter.
Volumes are off a little bit, a little bit in the regions, but not too far away. And so actually we think the season is okay.
And Michael, just personally, you've been in the game for a long time. I think I actually found somewhere that you referred to as the kiwifruit hotel manager. What gets you out of bed every morning working in the industry?
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Chapter 7: How does Seeka plan to manage inflationary pressures?
Well, I think that comment around the kiwifruit hotel manager, when people who don't understand what we do ask what we do, well, effectively, we run a hotel for fruit. We've got infrastructure assets right across the major growing regions. And for a fair proportion of our occupancy, We arrange it because we're the grower in some form with the landowner. And so that's quite a nice analogy for us.
In terms of what gets me out of bed in the morning, well, when I became the CEO, we were a far different company than we are today. We only had revenue of $30 million, and our listed entity, because we've got two, now revenue of $440 million. It's a very, very different business. There's a lot going on in it.
There's not too many people understand the depth and breadth of the activities and so what gets me out of bed in the morning is the next thing that needs to be done.
I'm a bit slow to catch on to this point but kiwifruit actually imported from So Chinese gooseberry and then renamed kiwifruit off the fuzzy brown exterior of the kiwi bird. I can't believe it took me so long to figure that out. But why does the world love kiwifruit so much?
Well, the answer is that it is a very nutritious piece of fruit and it's high in vitamin C. It's high in all the vitamins. It's very good for your digestive health. You can eat it with the skin on or off.
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Chapter 8: What opportunities does the new free trade agreement with India present?
It's grown here in New Zealand to very safe standards. It's nearly organic. The few chemical sprays that we apply sort of don't have any significant consequence to anyone. And so the clean, green, nutritious product that we're producing, you know, people want it the world around and it's a phenomena, it really is.
Talking about the competitive landscape, there are multiple post-harvest providers. Where do you sit in terms of market share and how hard do you have to work to retain that volume?
So we're the second largest post-harvest company. We're the largest grower. And while we've got a single desk in Zespri that coordinates all of the marketing, the next layers down are competitive. And that's actually quite an efficient model for growers because if we're competitive, we're looking for ways to innovate, to take costs out, to automate.
to be faster, better, smarter, and deliver better quality product to the market. So we are the second largest behind a co-op. We've got about 20% market share in the kiwi fruit sector.
You mentioned there the incentive to drive automation, efficiency, margin improvement. Can you point to some of those things that you're doing in the business?
Yes, I mean, our goal was to have an array of highly automated and efficient products machines close to where the fruit's grown, and across all of the major growing regions. We want to hire New Zealanders, but the volume that we're handling over time is going to go up. And labour's expensive, and sometimes doesn't want to turn up. And so the alternate to that is for us to automate.
And so we are automating, we are innovating. We have brought some new technology to the industry this year to remove labour and to make us faster, better, smarter. And that's the game that we play.
So technology and AI, where is that showing up? Like, are we talking robotics within the orchard, within the pack house, or is it a bit too early?
Well, I think the technology has yet to really extend into orcharding. Orcharding techniques and growing is really just innovating on old traditional methods. But in post-harvest, there's a high level of automation and sophistication coming in, in terms of not just packing machines, but also fully automated cool stores aren't too far away.
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