While the New Zealand Honey industry bandies about vast ranges for potential honey inventory volumes, Bruce Roscoe explores how the industry once had a firmer grasp on the honey stockpile, while looking offshore and to other industries for inspiration to overcome the shortcomings associated with counting the honey in the sheds.
By Bruce Roscoe
Since early 2021 estimates of the volume of honey stored nationwide have varied from 15,000 to 50,000 tonnes. The stockpile, therefore, might exceed annual export volume (CY2023: 9,850 tonnes) by 52.3% or 5.1 times. Which means, the honey in the sheds cannot be counted.
The industry clearly is more walking the edge of a precipice than facing a crossroads. All components of the inventory equation are either incalculable or only broadly estimated. For example, the volume of honey consumed nationally is not understood and actual production volumes are unknown.
This inability to stocktake handicaps the entire industry, but penalises beekeepers most. If the volume of inventory is unknown, then so is the volume of supply. If the volume of supply is unknown, beekeepers cannot know how much they should produce. Worse, for the volumes they do produce, packers can cap or cut prices paid by citing the high volume of honey in the sheds.
Four Estimates in (Nearly) Four Years
(1) "...we estimate the total volume of honey stored in NZ to be in excess of 30,000 tonnes (emphasis added) – nearly three times the volume of honey exported in 2020."
－NZ Honey Market Update (March 2021), Apiculture New Zealand.
(2)"The Ministry for Primary Industries...estimates the stocks of surplus honey to be between 20,000 and 25,000 tonnes..."
－ "Too many beehives, not enough buyers: NZ's great honey glut" (February 28, 2021), The Spinoff. (To our knowledge MPI does not estimate honey inventory.)
(3)"Apiculture New Zealand chief executive Karen (sic) Kos estimated there was an oversupply of between 15,000 to 30,000 tonnes of honey in storage..."
－"Mānuka honey: Beekeepers stockpile as international demand falls"
(6 October 2022), Radio New Zealand.
(4)"...she (Karin Kos, chief executive, Apiculture New Zealand)...estimated there could be between 30,000 and 50,000 tonnes sitting in sheds..."
－"Signs of hope for under-pressure honey industry" (14 August 2024), Radio New Zealand.
After assessing the data sources that loosely underpin the various inventory estimates, Apiarist's Advocate believes the volume of 50,000 tonnes in (4) is conservative. Our calculation in the following table arrives at a total of 61,000 tonnes.
Cottage Industry Counting
The methods of counting honey, whether volumes produced or sold locally or stored, befit a cottage industry, say honey in the year 2000 when 2,522 tonnes were exported for a FOB value of NZD11.3m. The current scale is barely comparable. Export value last calendar year amounted to NZD395.6m after declining in consecutive years since the peak of NZD505.5 achieved in CY2020. Yet the methods of counting seem unchanged, and in some cases －annual production volume, for example－ have become more guesstimate than estimate. The industry appears to collect no data about itself by itself. It rather recycles data produced by one or other government agency (as does this writer, and as could Apiarist's Advocate readers).
A Structural Surplus
Participation in mānuka export trade requires holding a substantial inventory of mānuka (and other, such as bush and clover) honey types for blending purpose. Even before the Ministry for Primary Industries (MPI) introduced monofloral and multifloral definitions of mānuka in 2018, a large inventory was needed for production of the various grades of mānuka honey. Post harvest a chemical reaction within the honey would continue to grow the methylglyoxal (MG or MGO) content. Reaching an optimal MGO amount would take two years, according to laboratory modelling. Meeting the MPI definitions in order to obtain export certificates required even more blending and thus more inventory. But how much inventory as an industry total is needed? Comvita Ltd, as the flagship mānuka honey packer and exporter, provides one guide.
In the five years to June 2024, Comvita's monofloral mānuka exports accounted for 45.5%, 42.4%, 46.2%, 62.6%, and 41.7% of the New Zealand total. Calculating from balance sheet data we can broad-brush estimate Comvita's mānuka inventory (raw material and packed product total) to have ranged from 6,700 to 11,20 tonnes in those years. The implied national inventory range is 15,700 to 26,300 tonnes. But Comvita as more packer than producer can cherry pick its intake (read Comvita’s Freeze Out Hits Honey Suppliers Hard) to meet forward demand of one to two years and draw on a 50-year well of experience. Only a small minority of packers are able to operate in that way. The guesswork of the remainder may match the guesswork underlying available secondary industry data.
The Champagne Industry Model
"We need to ensure supply and demand are balanced", the ApiNZ "New Zealand Honey Strategy 2024-2030: Futureproofing New Zealand Apiculture", declares. But there can be no "structural demand" to match the "structural inventory", because inventory must always be in surplus to support an export business in multi-grade mānuka honey products to a value of several hundred million dollars.
While market equilibrium is all but unachievable, the relationship between beekeepers and packers can be put on a less unequal footing. The Champagne industry model may have something to offer. Sitting atop groupings of grape growers and wine makers (Champagne Houses) is a "joint trade association" called the Comité Champagne. As a disinterested guardian it advises on suitable production volumes and performs intermediary roles among the industry participants. It is also charged with data collection and market research. Entrusting such to the Champagne Houses, this model seems to suggest, would be akin to assigning sheepdog duties to a wolf pack.
The Feast of Fear
The mānuka banquet has turned into a feast of fear, the Sword of Damocles strung by a horse hair and swaying over the heads of guests. Trade in the honey has been doubly good in good times, but triply bad in bad times. The need for inventory for blending is structural, but capital intensive. When sales turnover falls the cost of carrying that inventory does not decrease. Mānuka becomes a long or longer game or causes a collapse. Other honey types such as clover can be ill-fated in the same way when mānuka packers add them to the gumbo.
Pressure builds to clear stock. Cut-price selling and re-selling in offshore markets causes brand damage. Examples of mānuka wholesalers selling to wholesalers are now common. The primary wholesalers, unlinked to the retailers, lose influence over product presentation. As one result, don't-care sellers often enter mānuka into the "syrup" category on e-commerce platforms such as Amazon Japan. When keyboards or systems render the registered trademark symbol as a capital R, UMF® mānuka becomes "UMFR mānuka" for which error Google shows 7,070 Japanese search results. Costco Wholesale Japan prices are so low that customers can buy up stock for resale on various e-commerce platforms and post all manner of misleading claims about the product, and they do.
Product sold through business-to-business websites meets a similar fate. Deceitful sales tactics no longer raise eyebrows. Mānuka is passed off as organic when it is not, other certifications are advertised where there are none, prizes are claimed where none have been won.
More pressure builds to export mānuka in drums for processing offshore. New Zealand exported a daily average 3.8 tonnes of bulk monofloral mānuka in the first eight months of this calendar year at an average NZD26.70 per kilogram, 51.9% less than the NZD55.56 achieved for retail pack monofloral mānuka.
The High Price of Freedom
European interventionist agricultural policy of the 1970s caused overproduction of butter and milk among other foods. Surpluses became known as "milk lakes" and "butter mountains". Ironically in the case of New Zealand the morass of mānuka has been borne of deregulation rather than regulation.
The demise of the NZ Honey Marketing Authority (NZHMA) from an operational standpoint in 1980 brought to an end the collection of honey industry primary data. Whatever the NZHMA's marketing shortcomings during its later years, the records preserved in its 27 annual reports show a complete picture of production, storage, packing, trade, and more. Honey unsold as at the end of the NZHMA's August financial years from 1965-1974, for example, never exceeded the total volume sold locally and exported and averaged a shade over half at 0.51 times. And "honey unsold" included the volume "afloat" and held by overseas agents. Beekeepers could learn the amount of their payout as a percentage of export receipts (60.2% in the August 1979 year).
(The NZHMA ceased reporting "unsold honey" volumes in its last six annual reports from the August 1975 year. The honey in the sheds could still be approximated from financial data, but neither local buyers nor offshore agents could easily latch onto a loose-lip inventory volume and use it to drive down prices. Today offshore honey traders in an internet search of a few seconds can learn that the mānuka morass may be as much as 50,000 tonnes.)
After four decades of freedom from the NZHMA straightjacket, decisions on whether to participate directly as producer or packer, or indirectly as investor, still are made in a darkroom. It can be said that the industry has counted little by itself since August 1980.
Let the Counting Begin
Without waiting two, three, or more years for the formation of a "peak body" such as the Strategy document envisages, steps toward the collection or primary data for honey production and domestic sales can begin and without spending scores of thousands of dollars on public relations or market research companies. Harness website technology.
(1) Production data: As a condition of their registration, require the MPI category "beekeeping enterprises" at the end of each harvest (say in May when their honey is in the shed) to report extracted volume. Comb honey producers can report more quickly. Beekeeping enterprises with more than 50 hives number only some 930 (for context, that’s fewer than one quarter the roll of Rangitoto College). Reporting production volume should be no more complicated than an elementary homework assignment for high school students. The data is reported to a database-hosted website. Producer names are undisclosed.
(2) Domestic sales: We know the volume of retail pack honey exports. Each honey packer knows the total volume of their retail pack honey. As a condition of packing, licences require all packers to report that volume. Subtract the export total from the total provided by the packers. The result should approximate domestic honey sales within any year as, unlike drum honey, retail pack honey is distributed to retail outlets that expect to sell it within weeks. (The same can be done for comb honey.) The data is reported to a database-hosted website. Packer names are undisclosed.
The volume of honey in the sheds will then calculate itself. Whichever methods are employed, they should be direct and their accuracy match the intensity of the labour of beekeepers in summer.
Some Want It Darker
While a burgeoning (according to the progression of ApiNZ estimates) volume of honey in the sheds remains uncounted, honey packers can be expected to argue maintenance of the status quo. None has been heard to campaign for a national stocktake of the stockpile or implementation of a practice that would render unnecessary such a stocktake in the first instance.
Their markets for monofloral mānuka retail pack honey have remained firm. In the five years to CY2023 monofloral mānuka exports grew 32.1% by volume and 28.3% by value. (Over that period the per kilogram price decline was only 2.8%.) Against popular expectation, the export price for this highest value category of mānuka in the first eight months of CY2024 increased 7.2% to NZD55.56 per kilogram, compared to the same period in CY2023. Yet, in step, under the weight of inventory, the packers' buy-in bulk prices have fallen.
A Leaf From Japan's Book
NZHMA annual reports for the association's final six years show Japan to have been the largest market, accounting for between 41% and 66% of total honey exports by volume in the six years to August 1980. Whether remaining NZHMA archives can illuminate that history is unclear, but lessons perhaps can be drawn from Japan's current treatment of honey industry data. Foremost, production data is calculated, not estimated, and inventory is undisclosed. Beekeepers report production data to regional governments which are surveyed by the national government. The data categories are production, imports, exports, consumption. Inventory is the volume unconsumed. The Japan statistics seem to say: ‘The inventory total is for us to know – and in our industry, we do know it. But it is for you to guess, as we do not broadcast it to the malls of the world.’
A Time for Benevolence
Mānuka Doctor Ltd donated 200,000 250g jars of honey for use in food parcels in New Zealand during the Covid-19 pandemic, according to a June 6, 2020 Stuff news report. Comvita donated products worth NZD10,000 to workers of the Japanese Red Cross Society in its June 2022 year and 1,000 units of propolis spray and 500 packs of mānuka honey lozenges to Shanghai hospitals, among other examples of largesse noted in the company's June 2022 year annual report. It may now be time for the industry as a whole to follow those examples and begin discussions with the International Committee of the Red Cross on how a portion of New Zealand’s honey stockpile could be used in food aid. Separately, for all the industry's seemingly tokenistic references to "sustainability", the question occurs: What size of carbon footprint results from the warehousing of some 50,000 tonnes or larger volume of honey when an unknown proportion of that volume is stored under various levels of temperature control for one or two years?
Dividing Apart
Beekeepers collaborated in the development of the 2024-2030 "Thriving Together" Strategy, the ApiNZ document asserts. They saw a "transformation" and "value creation" during the mānuka-led expansion years. Some chose not to join the association. Varroa training should be compulsory, and use of non-approved varroa treatments made illegal. Those four points are the sum of "Strategy" content about beekeepers.
For all the "value creation" said to have been enjoyed by beekeepers, honey packers have long viewed beekeeping as a pastoral occupation best enjoyed pictorially through photographs. Since Airborne Honey sold its hives in 1997, ‘We don't want to own the hives’ has become a common refrain heard among packers. In only the three years since acquiring King Honey Ltd in June 2021, Me Today Ltd had disposed of some 18,000 hives. The timespan between comparable examples becomes shorter. Although the Three Peaks Mānuka Honey website under a "Now" heading boasts "...we have close to 8,500 hives..." that was then. Since its merger into the Perry Group-owned The Mānuka Collective in February 2022, Three Peaks Mānuka Honey has been reduced to a brandname.
The Impending Shed Shortage
Beekeepers build and repair hiveware during quiet winter months. Their carpentry skills soon could be put to profitable use if they choose to join the ranks of their fellows who seek employment elsewhere. Let us assume that total honey industry revenues through volume growth reach the Strategy target of NZD1b by 2030. (ApiNZ believes the goal is achievable through value growth built by a united industry focused on "highest quality" and telling "our unique mānuka honey story", but market conditions － read Australia－ appear likely to conspire against realisation of that noble dream.)
Without export price growth to NZD101.50 per kilogram from the NZD40.20 achieved in CY2023, volume growth is the alternative path to ApiNZ goal attainment. (A combination of volume and value growth is conceivable, but we simplify.) How much volume? Calculating from CY2023 data and assuming a constant export price of NZD40.20 per kilogram, export volume would need to grow 152.8% to 24,898 tonnes (annual compound growth: 14.2%) by CY2030. Such growth, hinging on mānuka demand, would call for an inventory of say three times that volume or 74,700 tonnes.
Many new sheds would be need to be built. Beekeepers could set up shed-building businesses.
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