BEFORE THE SPECIAL TRIBUNAL FOR THE NGARURORO AND CLIVE RIVERS WATER CONSERVATION ORDER AT NAPIER IN THE MATTER of the Resource Management Act 1991 (“Act”) AND IN THE MATTER of the Special Tribunal appointed under S202 of the Act to consider an application for a Water Conservation Order THE SPECIAL TRIBUNAL: Richard Fowler (Chair) Alec Neill (Member) Dr Roger Maaka (Member) Dr Ngaire Philips (Member) John McCliskie (Member) STATEMENT OF EVIDENCE OF PETER HOLLEY IN SUPPORT OF SUBMISSIONS BY THE WINEGROWERS, AND MISSION ESTATE WINERY STAGE 2 - MATTERS 5 March 2019 1 Qualifications and Experience 1.1 My full Name is Peter Andrew Holley 1.2 I am the Chief Executive of Marist Holdings (Greenmeadows) Ltd T/A Mission Estate Winery, Director of New Zealand Winegrowers (“NZWG”), Director of New Zealand Winegrowers Research Centre, Director of Bacchus ET (Pty) Ltd which trades as Mission Estate Restaurant. I am Chair of the Finance Committee of NZ Winegrowers. I have been a Director of NZWG since 2012 and formerly served as a Director on The Hawke’s Bay Winegrowers board and was a Director and founder member of the Gimblett Gravels Winegrowers association. 1.3 I hold a Bachelor of Commerce Degree with Honours from Rhodes University and a Master of Business Leadership Degree from the University of South Africa. 1.4 In 1996 my family and I immigrated to New Zealand and have been resident in Hawke’s Bay since then. Prior to leaving South Africa I pursued a career in over the counter and prescription medicines. I held both junior and senior roles in Richardson Vicks, Boots Pharmaceuticals. My last position was Chief Executive of Spectrapharm Laboratories a wholly owned subsidiary of Tiger Brands, one of the largest publically listed companies in South Africa. 1.5 In 1996 I took up the position of General Manager of the Greenmeadows Mission Trust Board. 1.6 My evidence supports the submission by Hawke’s Bay Winegrowers and Gimblett Gravels Winegrowers Associations (“Winegrowers”) on the draft Water Conservation Order (“WCO”) for the Ngaruroro and Clive Rivers, as well as the submission made by Mission Estate Winery. We oppose any WCO in regards to its application to the lower Ngaruroro River. 2 Scope of Evidence My evidence will address the following matters: 2.1 The importance of Hawke’s Bay as a grape growing region both to the province but also in the national context. 2.1 The Mission and its sustainable philosophy and accreditation 2.2 The necessity of water to grow grapes 2.3 The Economics of uncertain or unreliable water resources 3 The Province of Hawkes Bay 3.1 Hawke’s Bay, because of its geographic location, soil and climate profiles is very well suited to growing high quality grapes which are critical for the production of fine wine. The region has grown significantly and is now the second largest grape growing region in New Zealand and has some 4,681 hectares under vines. These vineyards service 91 wineries and 62 grape growers. The region is gifted with the potential to produce a broad range of grape varieties and therefore the opportunity to align products with different markets. This is particularly the case with the export of red wine to the very lucrative China market. The modern industry was based on the pioneering work of the French missionaries. 3.2 The missionaries who were sent to the South Pacific to teach Christianity brought vines with them. These were first planted in the Bay of Islands then Poverty Bay but finally relocated to Hawke’s Bay, where they thrived. The Mission vineyards were first planted at Pakowhai and then Meeanee. These vineyards were operated until 2002 where they were divested to raise capital to purchase land and vineyards on the Gimblett Gravels. This strategic move was critical to improve the quality of our red wine offering and to align with the increased demands of discerning customers off shore. The Company has continued to invest in vineyards both in Hawke’s Bay and Marlborough and supports a large number of growers. In total the Company sources grapes from 415 hectares of which 75% are located in Hawke’s Bay but more importantly in the Bridge Pa triangle, Gimblett Gravels, Ohiti Road and Mangatahi. All these vineyards are reliant on ground water and river take that is linked with the Ngararoro River. Water is absolutely critical for both frost protection at Mangatahi and irrigation for the remaining vineyards. 4 The Mission 4.1 “The Mission” is New Zealand’s oldest winery. 4.2 It was established by French Missionaries of the Society of Mary in 1851. It is still owned by the Society of Mary (“SOM”), a registered Charity. The Trust was largely focussed on the divestment of non-strategic assets. This was best achieved through the incorporation of a company and the appointment of a Board of Directors. In 1998 Marist Holdings (Greenmeadows) Ltd (“MHL”) was incorporated and has been trading as Mission Estate Winery since then. 4.3 The Mission has been operating in Hawkes Bay for over a 167 years. The company primarily grows grapes, produces and markets table and sparkling wine. 4.4 Mission owns vineyards in Hawke’s Bay and Marlborough and has a team of established contract growers. Mission has very strong domestic distribution and exports to five major export markets. The company also operates a visitor centre and a fine dining restaurant in Taradale which enjoys an enviable reputation both in the region and nationally. Mission also owns the Ngatarawa brands. 4.5 Over the last twenty three years the winery has been the focus of considerable investment and ongoing development. This investment has been critical to ensure the Dividend requirements of the sole shareholder, the SOM, are met. The Mission Dividend is critical in order to complete it charitable works, education (Catholic Colleges and theological training for adult learners) and pastoral care. The SOM is also responsible for youth development, community programs, counselling and relief of poverty. The Dividend is also essential for the care of elderly priests. 5 Sustainability 5.1 Sustainability is based on three pillars generally referred to as Social, Environmental and Economic. 5.2 In 1996 Mission became concerned about the effects of its operations on the environment and began to monitor both production inputs and outputs. This internal process resulted in the adoption of an Environmental Management Standard (“EMS”). The EMS chosen was the ISO 14001 which has been externally audited by SGS. Concurrent with this initiative the company has actively managed our vineyards and winery to the NZ Winegrowers Sustainable Winegrowing program. It is understood that we are only one of three companies in New Zealand to be accredited with both standards. 5.3 The EMS has provided significant opportunities to minimise our production inputs (water, sprays, energy) and to minimise our downstream waste (cardboard, plastic, and glass) but more importantly mitigate environmental effects through waste water treatment, composting and recycling. Mission is now recognised nationally as one of the most energy efficient wineries in New Zealand. From these demonstrable efforts it is obvious that our alignment with best practice is very clear. We are also clear in our philosophy and objectives that sustainable initiatives now need to be complimented with both repair and regeneration where possible. Under the new standard ISO14001:2015 we are now aligning and communicating the companies EMS initiatives with all our stakeholders. 6 The need for water – Mission Water Use 6.1 Hawkes Bay produces 80% of New Zealand’s full bodied reds (mainly Cabernet, Merlot and Syrah) and these are predominantly grown on soils that require irrigation. 6.2 Light texture soils (gravels/sands) and shallow top soils on gravel are the most suitable for the production of world class red wines. Growth of grapevines is a direct result of water availability and limiting water can have very positive effects on red wine quality (Wheeler et.al. 2005) by restricting the size of a grapevine’s root system and reducing canopy growth. Vines are able to be kept in balance with low vine vigour and lighter crop loads. Careful soil water management is required and the low water holding capacity of these soils enables this. 6.3 Irrigation is critical during prolonged dry periods to maintain vine health and on very light textured soils vines can exhibit severe stress if not irrigated within a few days. Vines will die if not watered on these soils during the summer. 6.4 The drip irrigation systems used on vineyards growing on these soils are the most efficient available as the objective is not to grow a large crop but to maintain vine balance and health. Water is applied by dripping directly below the vines and this only wets very small volumes of soil (2-3% of vineyard area) within a block. The emphasis is to maximise ripeness and flavours (quality). 6.5 Visual vine responses and soil moisture levels are monitored throughout the spring- autumn period to ensure that vines are not being over irrigated. In very dry seasons vines are subjected to a regulated deficit regime for a period whereby irrigation is withheld so that the soil moisture levels are kept very low. Again this is a method used to maximise quality by restricting berry size and concentrate flavours, colour etc. 6.6 In summary water is only used on vineyards where it is essential and it is managed in a very efficient manner and is constantly monitored under our EMS. 6.7 Restrictions on ground water takes at times of low flow would be catastrophic for our vineyards.