Exit Strategies – From Reluctant Sales to Zombie Operators
The reduction in registered commercial beekeepers has been dramatic in the past three years – on a par with the opposing surge in registrations when honey prices boomed last decade. The numbers only tell half the story though. It’s discussions with those who are selling, or just abandoning hives in the face of rising costs and falling returns, that helps complete the narrative. So, we talk to beekeepers and industry stakeholders about selling up and executing a successful industry exit.
Could you place Okarito on a map? How about Canvastown? or Lyell? Towns that were once bustling centres of activity, now home to few, or none at all. Why? Because the gold ran out.
The New Zealand honey industry has widely been analogised to a “gold rush” since soaring mānuka honey prices in the first two decades of the 2000s allured new entrants to beekeeping. Now, following two lean years of mānuka honey returns to the producer and at least four years since a non-mānuka price collapse, some beekeepers are abandoning their hives and sites much like the forlorn prospectors of yesteryear eventually left town when the gold stopped glittering.
With modern-day beekeeping it is not quite as simple as tossing the pick, pan and canvas over the shoulder and hitting the dusty trail though. For most, an industry exit means trying to recoup some financial return through the sale of expensive business goods – vehicles, honey extraction equipment, hiveware and beehives themselves – or sale of their business as a going concern. However, in a market where the cost of producing seemingly every variety of honey exceeds the return for its sale, few are buying. Inevitably hives are being abandoned and the disease risk to the remaining colonies is real.
Trying to do Right
Cameron Bartlett is determined to make his exit from the industry on good terms, and that means settling his debts and doing what he can to ensure his remaining 500 hives are well looked after. The Northland beekeeper’s business timing couldn’t have been much worse. He entered a thriving industry in 2011, first working for Comvita and then Mānuka Health as a beekeeper, before getting into hive ownership in 2015 while continuing to work for large commercial beekeepers. After meeting some financial backers he took a bigger business plunge in 2017, fully striking out on his own and reaching as many as 1200 hives as honey prices began to fall. Now, with several season’s worth of honey sitting unsold, Bartlett is seeking a way to wind up his beekeeping interest.
“Bottom line is, it's become unviable and we are having to shut it down. We've been continuing with optimism for the last three years. Now, it's got to this point where it's really disheartening putting in all that effort and not being able to sell honey,” Bartlett says.
He is one of many beekeepers facing the same problem as honey packers and exporters show limited demand for New Zealand’s ‘high-grade’ mānuka honey supply.
“One of the biggest problems is that, as a relatively new company and player in the industry, you kind of go to the bottom of the line as far as when buyers have a requirement for a certain type of honey. They will go with their more long-standing customers first. Potentially, I'm at the bottom of the line in that respect, even though all attempts have been made to make good relations with all the different buyers,” Bartlett explains.
Add to that rising business costs, or, in the case of hive-placement fees, rising costs relative to any honey income, and it’s a business model that can’t be sustained any longer.
“When we first got into business, the industry was very much pushing high grade mānuka and we started paying crazy prices to get onto these blocks. It was probably relative at the time, to the prices of honey with the activity we were producing, but that slowly changed and decreased year to year. But once you've negotiated those prices to secure the sites against competition, trying to tell the landowners to bring it back to reflect the current market is a challenging thing to negotiate,” Bartlett says.
He's attempted to sell the business since the 2021/22 season wrapped, and almost had a buyer sign off on taking it as a going concern, but that fell through. Now, his focus is on selling, or finding an appropriate home for, his 500 hives and recovering at least enough money to make good with his business partners that helped fund their growth.
Bartlett calls the situation “mentally very stressful and challenging”.
“This has been such a saga that, just trying to resolve it and be free from it all, will be so liberating, even though we've gained nothing and lost a lot.
“Friends in the industry around the place have all got the same story. And we all share and sympathize with each other about not having sold any honey. But we're all driving around with a pretty miserable face. And that's not the way we are, it's just how it is.”
There Goes the Acumen
While the number of registered hives and commercial beekeepers drops, so too does a wealth of knowledge from the beekeeping community.
In Tauranga Jason O’Callaghan is down to approximately 50 hives, having sold off about 500 this spring after 30 years beekeeping. With 50 hives, and a contract extraction facility still operating, there is still potential to more fully re-enter the industry in the future, but that may never happen.
“My wife, my old man and I loaded up a couple of big dump sites of hives for the corporate buyer’s truck to come in and collect over a few nights,” O’Callaghan says.
“We watched them drive out the gate and thought ‘what a lot of knowledge and experience exiting the industry’. While there might be some good key members in these companies, there are a lot with minimal experience in between. The knowledgeable people are spread over a lot of hives and a lot of teams. They will never get the results we did.”
O’Callaghan’s Bees a Plenty business was getting good results in the field – high levels of honey production, minimal winter losses and varroa management well in control – but he had to work hard for it he says. And, like others, the lack of a market for high-end mānuka honey meant a drastic change in management practises would have been required to keep Bees a Plenty fully in business.
While hive buyers are few and far between, large beekeeping entities Comvita and Mānuka Health have both been among those who are known to have bought hives in the past six months. Being a buyer’s market, they are likely picking out the best managed hives and businesses to acquire.
“They can replace their losses by buying up good hives from me, but those hives will run out. Certainly not this year, maybe not next, but perhaps the year after. They will run out and there will be opportunity again for good beekeepers, not just people who have a market for their honey,” O’Callaghan believes.
His advice to other beekeepers considering exiting the industry is to make the call early, while hives are still in an inviting condition.
“The guys whose businesses are collapsing and running out of options on how to manage their hives, are also running out of options on how to sell them. You should always get out before you have to get out. I think that is sound advice no matter what industry you are in.”
In Whanganui, veteran beekeeper Gary Sinkinson has been able to make his own successful sale of his Gazzabees hives to Mānuka Health and his experience reinforces that of O’Callaghan’s.
“We had sold 150 hives to them in a previous season, so they knew we had varroa under control and were impressed with the condition of the hives compared to many other people’s bees after this winter,” Sinkinson says.
The fact many of Gazzabees’ apiary sites were “good quality” mānuka blocks also appealed to the buyers, but the buyers are definitely selective Sinkinson observes.
“There are not many people being bought up by the big outfits. From what I have seen it is few and far between. They are hurting as well.”
Not for Lack of Love
While the financial realities of running a beekeeping business are making many operations undesirable, at best, and, at worst, unsustainable, there is still passion for beekeeping among many who are nonetheless seeking to sell up.
“It’s just got too stressful trying to run it,” laments Richelle Doerner-Corson, owner of Gowanleagold in Canterbury, who along with husband James Corson has recently bit the bullet and decided to list.
“We are forced to, really. James doesn’t want to, because he is still so passionate about it.”
Businesses such as theirs offer a great career opportunity to the right buyer she believes.
“You will never buy beehives cheaper. A few years ago, it was $1000 for a hive, now we are struggling to get $200. It is a perfect opportunity for a young, keen person. It is a young person’s career too. It is a lifestyle. In the summer it is all about the bees. There is no partying, but if you are passionate about the bees and enjoy being out there in the sun in an amazing office, in the hills and the back blocks, then it is for you.”
A Rush for the Door
While the circumstances of beekeepers looking to sell up undoubtably differ depending on a range of factors, the current demand for mānuka honey, or lack thereof, is seemingly the primary reason many are being driven out of business. While the slowdown in demand has been coming for about two years – since a bumper honey harvest in 2020 created a supply/demand imbalance – it is only recently the majority of ‘for sale’ signs have gone up according to well-positioned industry observer Nick Taylor.
“What surprised us was how rapid the movement was,” says the general manager of beekeeping equipment supply and beeswax trade company New Zealand Beeswax.
“It felt like everyone did the same thing in the space of six to 12 months. I know they didn’t coordinate, but it was so orchestrated you thought it was. Some companies we have dealt with for years and thought there is no way they will be on shaky ground, but then you ring back and they are gone. We thought they were good business models, it seemed like they were going pretty well on the scale of things. You never quite know the full story behind it.”
While New Zealand Beeswax has seen a general slowdown in purchasing behaviour from beekeepers since non-mānuka honey prices slumped in 2018, the hurt to beekeepers has been somewhat limited as the lack of demand has seemingly not been for the same variety of honey for concurrent years. However, with most beekeepers building their businesses around mānuka honey production and a lack of interest from buyers for the variety entering a second season, the pinch is tightest now, Taylor explains.
“This year has been the year of beekeepers nursing cashflow and uncertainty on honey pricing, uncertainty on timing of sales and, even when a sale is made, it often comes with staggered payments,” Taylor says.
The AFB Management Agency is tasked with dealing with apiaries which become abandoned and one of their two national operations managers, Dwayne Hill, says beekeepers going out of business is far more noticeable in the North Island, especially Northland. He also puts this down to the struggles to gain sufficient returns for mānuka honey.
Layers of Struggle
From Taylor’s perspective, there are “layers” of beekeeping business in the current operating environment, with those who are buying up cheap hives having clear purposes in mind.
“At the very top are a couple of large corporates who are buying up high value operations that produce high value mānuka honey. They will be growing to some degree, but also consolidating and removing under-performing sites to reposition their operation to higher value, higher yielding sites and removing the underperforming.
“A lot of the hive buying is to protect territory and prevent anyone else coming into the area, so that they don’t have neighbours and the problems they bring. The appetite for that is not bottomless though. It is very targeted and very specific.”
Then there is a second layer of large operators or “mega commercials” who are reducing hive numbers, sometimes by tens of thousands.
“A lot of that is also consolidation, focusing on value, shortening their travel and just hunkering down in uncertain times.”
Below that is the smaller commercial beekeepers who are going through similar methods of consolidation, albeit on a smaller scale.
Then, at the lowest layer, are what might be deemed “zombie” operations, beekeepers who maintain their hive registrations and, Risk Management Programmes (RMPs) for honey extraction but are limping along, Taylor observes.
“They are clinging in there in name only. Is it because they are waiting for a sale? Is it because they are waiting to come out the other side? The rumour is, that zombie tail is quite long. A lot of businesses are not functioning properly because they just don’t have the cashflow or certainty. Something is missing to mean their business model does not stack up in the current environment. They are clinging to some sort of hope, or for someone to mop them up.”
Unattended, ‘zombie’ hives come with problems of their own for those who remain in the industry, not the least of which is the risk of spreading American foulbrood, a concern detailed in Reducing the AFB Risk of Abandoned Hives – the Responsibility of All Beekeepers in this issue.
“You hear rumours of poorly managed or abandoned hives. We hear the anecdotes all the time and that will only accelerate as the organisations get more and more distressed. It’s hard to quantify how many hives that is. What you can quantify is the dramatic reduction in registered hive numbers, that is real and happening and there is almost no exception to the rule,” Taylor says, adding “it’s almost universally tough out there”.