Growing smarter

Monday 1st July 2002

Ten years ago, Hamish Alexander was a vegetable farmer, growing early crops for the local market. Today he runs Southern Paprika, a 50% joint venture with Dutch horticulture company Levarht, growing $6 million of capsicums a year, 75% of which are exported, largely to Japan. Whew. (In case you're confused, "paprika" is the Dutch word for capsicum - Alexander doesn't make the red spice of the same name.)

I'm no greenhouse expert, but Southern Paprika's growing operation looks impressive. Tubes individually feed and water each plant, and pipes pump CO2 at the plants during the day and heat at night. There are computer keypads every few metres and computers monitor everything from the amount of fruit being picked to light levels in the greenhouses (for example, on a cloudy day the computer tells the pump to send in more fertiliser). People wander about with personal digital appliances so they can monitor the capsicums and feed information back to the computer. The frame and the angles of the metal struts for the greenhouses are carefully engineered so as to maximise the amount of light.

This sort of stuff doesn't come cheap, or without risk. Alexander has around $10 million-worth of high-tech greenhouses on his 5ha Warkworth property, another 2.5ha is under construction, and there is a further hectare of greenhouses at nearby Point Wells. When he first started, New Zealand banks wouldn't touch him - they knew how to price farm land but not glasshouses, and weren't convinced by the argument that it was just a factory and should be valued accordingly. Alexander ended up getting financing from Rabobank, a Dutch bank.

Of course, Alexander isn't the only New Zealand company taking hot-house growing seriously - New Zealand Gourmet has been growing capsicums under glass for some time, and even Turners & Growers is getting in on the act. But Alexander was one of the first to recognise the potential of a move to glasshouse production, and is now the second-largest capsicum grower in the country.

It's a hard business, and getting harder. Before the Koreans got into growing off-season capsicums for Japan, growers were getting up to $10 per kilo for their produce. The price dropped to $4 to $5 per kilo in the 2000-2001 season and dropped again this year as the Japanese economic crisis worsened. If the Dutch experience is anything to go by, prices will fall further (the Dutch are getting only $2 to $3 per kilo). Plus, New Zealand growers are also being hit by the drop in tourism after the September 11 attacks on the US. Capsicums tend to travel cargo-class on tourist flights; with fewer planes, freight capacity is becoming increasingly squeezed.

But as Alexander says, when times get tough, you just have to grow smarter. At present, Southern Paprika yields of over 27kg of capsicums per square metre, but Alexander is aiming for over 30kg/m² within two years. He's put in a production line that packs individual capsicums in plastic for Japanese supermarkets. And he's investigating using new controlled-atmosphere sea containers, to see if he can improve freight costs.

Alexander scoffs at the idea that commodity production is just a mug's game in today's internet economy. He's making money and will continue to do so, he reckons. "Niche production can make huge money, but the market is very easily oversupplied. I'm not unhappy that capsicums are becoming more of an everyday product." He believes primary production has more chance to make money for New Zealand than anything else over the next 20 years. "The secret is to do it better than everyone else."

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