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kūmara
Kūmara prices have skyrocketed and they’re not coming down anytime soon. (Photo: Getty; Design: Archi Banal)

BusinessMarch 16, 2023

Kūmara is up to $10.99 a kilo. It’s going to be that price – or more – for a while

kūmara
Kūmara prices have skyrocketed and they’re not coming down anytime soon. (Photo: Getty; Design: Archi Banal)

Growers are pulling dead plants and rotting kūmara out of the ground. They say it’s just the start of Cyclone Gabrielle’s devastation.

At Pak’nSave, the orange ones will set you back $8.99 a kilo and the purple ones are $10.99. Customers at New World are being charged $10.99 for a 900-gram bag. At Countdown, they’re $10.99 a kilo too. Handily, its online store estimates each one will cost you $4.40. Get a big one and the sky’s the limit. “I paid $6.50 for one at Pak’nSave yesterday because they were all gigantic,” one Spinoff staff member admitted. 

Right now, buying a humble handful of kūmara to add to your autumnal roasts, soups or mash is incredibly expensive. In a matter of weeks, prices at my nearest supermarket have risen from $1.99 to $10.99 a kilo. It doesn’t matter which variety you’re buying – even though the shiny pink sticker proudly declares “In season,” you’ll need a bonus or a bank loan to be able to afford them.

kūmara
Kūmara prices at Countdown have hit $10.99 a kilo – or $4.40 each. (Screengrab: Countdown)

Why has the price of this staple food item skyrocketed so much? “It all depends on the weather,” says Warwick Simpson. The director of Simpson Farms, which covers about 50 hectares in Ruawai, near Dargaville, says growing good kūmara is a simple equation. “In a good year, it’s pretty easy … not too dry, not too wet. That’s about it.” He followed in his father’s footsteps and joined the family business 12 years ago. He enjoys being out in the sun all day, and the soil around him is perfect. “The clay base makes the tubers swell up nice.”

This year, Simpson’s equation has been blown to smithereens. First came the heavy December rainfall that ruined the kūmara planting season. Simpson estimates only 70% of his normal kūmara crops were able to be planted. Then came the cyclone. His crops were flooded and some were underwater for more than five days. There was so much rain hitting his farm Simpson couldn’t even measure how much there was. “The rain got blown across the rain gauge,” he says.

This has had a major effect on supply. Normally, growers begin pulling up crops in mid-February. Kūmara fans should be enjoying the bounty – and cheaper prices – of a plentiful new season, while surplus is stored for later in the year. Not this time. Instead, most plants have endured so much rain, they’ve simply died. What’s left is rotting in the ground. “No one knows for sure how much kūmara we’ve lost, but we know it’s a lot,” says Simpson. “There’s been estimates ranging from 50% of the crops lost through to 95%.”

kūmara
A kūmara with fungal damage. (Photo: Getty)

The day Simpson chats to The Spinoff, he’s preparing to harvest his own crops. He’s not hopeful his will have fared any different to any of the other kūmara farmers he’s been commiserating with. “I haven’t talked to any kūmara growers that are completely unscathed,” he says. Some are wondering how they’ll survive. “There are going to be some pretty stressed out phone calls with the banks … because we’re going to have to borrow to get started again.”

Still, Simpson’s lucky: there’ll be some salvageable kūmara in among his rotting ones. Others haven’t been so fortunate. “There’s not going to be any kūmara from us this year,” Whangārei farmer Geoff Crawford told RNZ. Delta Produce general manager Lochy Wilson told Stuff he knows of one grower who paid staff to pull kūmara out of the ground by hand because tractors couldn’t get through the mud. “It blew every one out of the water,” Wilson says of the weather.

Just yesterday, food prices were confirmed to have risen 12% on this time last year, the biggest rise in 34 years. “Torrential rain and high winds have not just destroyed crops but have hampered the whole planting and harvesting cycle,” said United Fresh president Jerry Prendergast. As for those prices? Barring a miracle, they’re here to stay. “I think those high prices are probably going to stick around for about a 12-month period,” says Simpson. Basically, until the next season begins.

The great kūmara shortage of 2023 is something Charlotte Muru-Lanning has been thinking about a lot. “I don’t think there’s much that can replace the specific unadorned beauty of a boiled kūmara,” says The Spinoff’s resident kai expert and editor of newsletter The Boil Up. “Considering their staple significance within the indigenous food traditions of Aotearoa, it’s especially heartbreaking to see kūmara so inaccessible.”

‘He mea tautoko nā ngā mema atawhai. Supported by our generous members.’
Liam Rātana
— Ātea editor

She has some ideas to tide those missing them over the coming lean months. “If you’re looking to imbue a dish – say, a soup, roast vegetables or a warming pot of beans – with the same nutty sweetness, I’d simply dial up the carrot or parsnips,” she says. “Unfortunately both lack the melt-in-your-mouth richness of their expensive cousins, so I’d be extra generous with fatty ingredients like sour cream, cheese, seeds, avocado or bacon to make up for that.”

If that’s not for you, you could always turn to kūmara’s cheaper cousin, the potato. At $4.99 a kilo they’re half the price of kūmara, and Muru-Lanning predicts potatoes could soon be back on the menu in a big way. “As an alternative to the purple-fleshed variety of kūmara, I’d look out for bags of medley potatoes that include rīwai or purple potatoes – which are a worthy equivalent in both hue and their earthy mild-sweetness.”

Keep going!
How one smallish bank set off a frantic few days which whiplashed the world. (Image Design: Tina Tiller)
How one smallish bank set off a frantic few days which whiplashed the world. (Image Design: Tina Tiller)

BusinessMarch 15, 2023

What happened to Silicon Valley Bank, will it spread – and could it happen here?

How one smallish bank set off a frantic few days which whiplashed the world. (Image Design: Tina Tiller)
How one smallish bank set off a frantic few days which whiplashed the world. (Image Design: Tina Tiller)

A previously obscure bank – albeit with a connection to some of the world’s most famous companies – imploded last week. Duncan Greive explains.

What just happened?

Silicon Valley Bank (SVB) abruptly collapsed on Friday (US time) after a good old-fashioned bank run saw many customers withdraw funds, leading to it running out of cash. Rumours had swirled about its solvency for some time, but the triggering events were warnings from the likes of Peter Thiel’s Founder’s Fund that companies it had invested in should get their deposits out. Because banks always loan out more than they have deposited, when enough people asked for their money, Silicon Valley Bank was caught without enough liquid assets on hand to meet its obligations.

SVB was the largest bank to fail since Washington Mutual during the GFC in 2008, and the second-largest in US history, with US$209bn in deposits. It was closely followed by the failure of Signature Bank, a Wall St firm with significant exposure to the crypto sector. While its asset base, at US$88bn, was less than half that of SVB’s, the failure of another bank with close links to the tech sector so suddenly led to fears of contagion – of more banks tipping over. The US, unlike New Zealand, has hundreds of relatively small banks, many of which saw sharp declines in their value as investors speculated about whether these were isolated incidents or indicative of more widespread issues.

Why was SVB so exposed?

While relatively small, SVB has a key role in the tech sector, making loans and opening accounts for many of the tech firms which have had a huge impact on the world over the past 40 years. Household names like Shopify, Pinterest, Roku and Andreesen-Horowitz banked there, many with tens of millions of dollars in accounts they relied on for basic operating expenses like payroll.

The problem arose when SVB invested in a large amount of government bonds in 2021, paying a relatively low fixed rate of interest. When interest rates rose, it had to pay more interest to cover its own depositors than it was taking in from the bonds – and because the bonds were meant to be owned for many years, it could not sell them for face value. As more and more of those who banked there became aware of its issues, they started to withdraw funds, worrying that the bank would be unable to meet its obligations – a classic fear-driven bank run.

A bank run – isn’t that more of a Great Depression thing?

A bank run is a situation where a large number of account holders withdraw their funds from a bank all at once. Because a bank always loans out more money than it has on hand at any given time, it is vulnerable to such a scenario, if a perception takes hold that it might not have enough cash around to cover its deposits. During the Great Depression in the 1930s, bank runs were commonplace – over 9,000 banks failed, devastating many American communities. Ultimately the economy only turned around through major government intervention, leading to the creation of the FDIC, which rescued Silicon Valley Bank, and ultimately paved the way for a much more interventionist style of central bank, such as that we experienced post-Covid.

Were any New Zealand businesses impacted?

Yes. RocketLab was perhaps the most-prominent, with US$38m held at SVB – yet due to its scale this represents less than 10% of its cash holdings. Two NZX-listed companies also used the bank, with Comvida’s subsidiary joint venture Caravan Honey and IkeGPS both impacted. Crimson Education also claimed to have withdrawn its funds just 30 minutes prior to wires being stopped. 

More broadly, the news might quixotically be welcomed by New Zealand’s banks. The Greens are calling for a windfall tax on banks, and PM Chris Hipkins expressed discomfort with fresh record bank profits on RNZ this morning. Yet the SVB crisis can be read as an endorsement of a highly concentrated banking sector, with New Zealand’s banks comparatively huge, very well-capitalised and spread across a large number of sectors, meaning a similar situation is hard to envisage in the local market.

Could this be the start of the next financial crisis?

It’s unlikely. Temperatures ran hot over the weekend, with US Treasury Secretary Janet Yellen mentioning that they were monitoring “a few banks”, and saying of a bailout “we’re not doing that again”. But after the collapse of Signature Bank, the government moved to assure depositors that they would have full access to their funds from Monday (US time). 

This was meant to send the message to markets that the many large technology firms which used SVB as their everyday bank could continue to operate as normal. Prior to these statements some tech stocks were hit hard in after hours share trading, based on fears that the bank’s collapse might have ripple effects into the already-troubled tech sector. The intention is to find a buyer for SVB – likely wiping out holders of its stock and debt, but ensuring the broader market is protected from further chaos.