In a report for Zespri, TDB estimated the financial impact that the Environmental Protection Authority’s proposal to end the use of Hydrogen Cyanamide would have on individual New Zealand kiwifruit growers.

Our analysis uses orchard production information (e.g., hectares of different fruit and fruit production) combined with survey and trial data that provides an assessment of regional variations in production costs and the impact of HC on fruit yields. From the data we derived estimates of the impact of HC use on orchard-gate revenue, net orchard returns and the profitability of 2,908 individual orchards. The results suggest that the removal of Hydrogen Cyanamide could have a major impact on the sector, making around 15% (around 450) of currently profitable orchards unprofitable.

As a cross-check on our analysis we use the Altman Z-score approach for identifying the risk of bankruptcy. This approach suggests our estimate of 15% of orchards becoming unprofitable may be conservative. The Altman Z-score analysis suggests that up to 30% of orchards (around 900) could be placed into financial distress by a removal of Hydrogen Cyanamide use.

Other reports prepared by NZIER and Sapere suggest that at an industry level a removal of Hydrogen Cyanamide could reduce annual orchard gate returns for kiwifruit growers by $200 million.

The EPA’s proposal is due to be considered at the Decision Making Committee’s hearing in late February 2024.