Forecast Changes – 2020 Season
Zespri state the following:
From the 2020 season we are condensing the number of Financial forecasts we prepare. The primary change is that we are dropping the October and December forecasts and replacing these with one November forecast. Central to this decision was weighing up the value of delivering two forecasts in a such a short space of time versus providing the industry with updated information on the progress of the season. Due to the back to back nature of these forecasts there is not a significant amount of new information used to create these forecasts and the average TFSP change between forecasts is not generally material. The TFSP change from the October to December forecast over the last 4 years has averaged less than 1%, see below.
August to October: 1.7%
October to December: 0.7%
For progress payments this means the August forecast will be used as the base for November payments, where in the past the October forecast was used. The November forecast would be used for December progress payments, where in the past, generally the October forecast was used. When calculating progress payments, as well as basing the payments on the most recent forecast, we take into account any known market factors, sales progress and company cashflow. We believe this should have minimal impact on progress payments and will continue to monitor this to ensure the timing and the percentage of payments returned to the industry from progress payments is not impacted.
As a result of this change, the November forecast will be used to update the standard cost models to inform the indicative service and incentive rates for the following season. In the past the December forecast was used for these indicative rate calculations.