Investment fund eyes Central Otago cherry option

Central Otago cherries are being considered, but nothing has been “lined up” yet, says Craigmore CEO, Che Charteris

Craigmore’s fundraising for the new Permanent Crop Partnership was covered by the Otago Daily Times this month.

The Otago Daily Times article:
Craigmore Sustainables began fundraising for a new Permanent Crop Partnership in 2016, with a target of $250 million. It was “quickly approaching” that target, and expected closing the partnership for new funds next month.

The strategy was to build a diversified business of the best of New Zealand orchards across a range of fruits for which the country already had an established reputation, including kiwifruit, apples and wine grapes, plus emerging crops such as cherries, citrus and avocado.

Investments would include land, trees/vines, buildings and fixed equipment and processing and marketing assets.

A majority of the orchards would be greenfield developments converted by Craigmore from pastoral or arable farming.

The opportunity was “huge” given the expertise New Zealand had in growing and exporting fresh and healthy “superfoods’ to the world.

“New Zealand horticulture is highly competitive in many fruit crops and we also have the logistical capabilities to ensure high quality fruit arrives in demanding export markets in the very best condition,” Mr Charteris said.

Demand was growing for the likes of kiwifruit, apples and avocados in both emerging markets, like Southeast Asia, and in traditional markets such as Europe. New Zealand horticulture exports had grown at 7% per annum for 20 years.

Asked about the likelihood of Central Otago cherries, Mr Charteris said Craigmore would “absolutely love to do something there” and it was also looking at cherries in the North Island. Taking a minority stake in an existing business would be considered.

The fund had investment from Germany, Hong Kong, Swiss, British, Finnish, American and New Zealand investors, but investors could not have any control. It was about local control and decision-making, and investors must be long-term passive and accept Craigmore’s strong sustainability values, he said.

Craigmore Sustainables was established in 2008 by Forbes Elworthy, from a prominent South Canterbury farming family, and his brother-in-law Mark Cox.

It now managed a mix of dairy, grazing, forestry and horticultural properties throughout New Zealand, encompassing more than 15,000ha, and including dairy interests in North Otago.

There had been a focus on planting marginal hill country into new carbon and timber forests. Those forests were now absorbing sufficient carbon dioxide to offset two-thirds of the net greenhouse gas emissions of a small New Zealand city for the next 15 years.

The main barriers to the conversion of North Island dairy farms to orchards was that expertise for specific crops tended to be limited to specific regions, and the lack of local equity capital for what were very capital intensive and long-term projects, Mr Charteris said.

Craigmore was also looking at opportunities to partner with Maori landowners, and at other lower-impact production techniques such as organic management.

He was supportive of Overseas Investment Office requirements, even though it did slow the investment process.