New Zealand Kiwifruit Returns: Factors Determining Overseas Demand

Kiwifruit and apples are the main horticultural export earners for New Zealand. The main markets for New Zealand kiwifruit are the continental Europe, Germany in particular, and Japan. In this paper, overseas demand equations for each of these markets are developed in the price dependent form are linked to the New Zealand fob and grower returns. Total imports of kiwifruit into these markets, domestic kiwifruit production, per capita consumer expenditure and price of competing fruit types are utilized to develop a recursive price determinant model. Total import price of kiwifruit in these markets are estimated first, which in turn determines the price received by New Zealand kiwifruit, partly influenced by the volume of kiwifruit imported from New Zealand. These prices are then linked to the New Zealand returns at the fob level for each of these markets which in turn determines the weighted average New Zealand returns and thus the prices received by kiwifruit growers. This export market model development has allowed New Zealand prices to be endogenised in a "Regional Kiwifruit Acreage and Yield Response Model" already operational within MAF Policy for three years.