By Rebecca Howard and Charlotte Greenfield
WELLINGTON (Reuters) - Five years ago, the future of New Zealand's celebrated kiwifruit industry looked dire as a previously unseen disease decimated orchards, forcing growers to rip up vines and sending production plunging.
But helped by a new disease-resistant variety and the soaring popularity of the nutritionally-packed berry, kiwifruit exports are now helping prop New Zealand's economy amid struggling sales of its major agricultural product, dairy.
New Zealand's grower-owned co-operative Zespri International Ltd last week reported record sales volumes - and returns for growers - on the back of booming demand for the fruit and its health properties, particularly from China.
"Asian markets see food as part of their approach to health," Zespri International Ltd chief executive Lain Jager said. "Food is medicine and we are perhaps growing faster in Asia than in the U.S. and Europe, primarily off that health platform."
The egg shaped fruit is marketed for its high nutritional levels - one serving has around twice as much vitamin C as an orange and provides nearly as much potassium as a banana.
Zespri sold 131.6 million trays in the year to March 31, up 21 percent on the previous season. Sales revenue also jumped 21 percent to a record NZ$1.9 billion ($1.3 billion).
Much of the rise was due to a recovery in exports of gold kiwifruit, a sweet, smooth-skinned variety particularly hard hit by the PSA pseudomonas syringae pv. actinidiae (Psa) bacteria that was discovered in New Zealand for the first time in 2010.
For New Zealand's agriculturally dependent economy, the recovery couldn't have come at a better time. The country's dairy sector, which accounts for a fifth of all exports has been struggling with weak demand and plunging prices.
"Rises in exports of our smaller commodities, such as fruit, are offsetting the falls in the dairy sector," said Statistics NZ senior manager Nicola Growden.
As dairy exports fell almost 12 percent to NZ$11.2 billion in the year to April, fruit exports rose by a third to NZ$2.4 billion, data showed.
GOLD STANDARD
Doug Brown, who owns a 50 hectare (124 acre) kiwifruit farm in the small coastal town of Opotiki in New Zealand’s eastern North Island, said growers were breathing a sigh of relief as the industry recovers from Psa.
Authorities still haven't determined exactly how the bacterium was introduced, but it spread quickly.
Zespri responded to the Psa virus by developing a new variety that is more resistant to the disease, which has been found in other growing regions including Asia, Europe and Chile.
It now expects to increase volumes of higher value gold kiwi fruit from 32 million trays to about 45 million trays this year.
"The new gold variety’s going particularly well," said Brown, who sells 600,000 trays of kiwifruit annually. "It’s almost a challenge to grow enough."
Much of the rising demand is coming from China.
Already the world's largest producer and consumer of kiwifruit, China is poised to become Zespri's number one market by volume in the current season and to account for around one-fifth of its sales.
Zespri plans to expand in China, growing the number of offices and increasing staff to 90 from 25 over the next three years.
Last November, it signed a memorandum of understanding with the local government in the central Chinese province of Shaanxi to assess growing local kiwifruit varieties.
Kiwifruit used to be known as Chinese gooseberries, but were renamed by New Zealand growers after the country's iconic flightless bird as a marketing ploy.
New Zealand fruit is particularly popular in Asia for its perceived clean, green growing environment.
"It's all about the quality of the fruit, and New Zealand’s brand behind it," said Huub Kerckhoffs, a kiwifruit researcher at New Zealand's Massey University.
The new variety is also selling well in the United States, prompting Zespri to boost its presence and take on top U.S. supplier Chile.
More strains are in the pipeline, with a new green variety expected to launch next year. Longer term Zespri is working on commercializing tiny kiwi berries and a variety of red kiwifruit.
"I think most growers are quite optimistic for the future, there’s lots of good things happening," said Brown.