Australia had a bumper honey harvest in winter this year, and spring is already looking good as well.
Ben McKee, CEO of Australian Stock Exchange (ASX) listed honey packer - Capilano, said that it was the “largest ever winter honey supply for many, many years."
McKee's remarks were contained in the company’s official profit report to the ASX earlier this month.
The profit results show that Capilano tightened its stranglehold on the Australian market over the last 12 months, even though its overall sales were slightly down for the year.
Net profits after tax increased to just over $AUD 10million for the financial year 2016/2017.
The increased profit was achieved despite both lower sales overall, and “a major customer” slashing some $3.4million in rebates.*
Creative accounting with the Manuka honey assets Capilano bought from Kirks Bees last year also helped boost the company’s profit result this year.
Capilano sold its Manuka honey assets to MediBee Apiaries in July of 2016, for some $9.225million.
It was a great deal considering that most of the assets were bought from Kirks Bees back in August 2015 for just $6million.
Even better, Medibee Apiaries Pty Ltd is half-owned by Capilano with New Zealand company, Comvita.
So whilst Comvita may have kicked in real money for the purchase, for Capilano it has been mainly an accounting exercise.
Indeed Capilano is claiming that the $3million of the money it paid to MediBee Apiaries is, in fact a loan of working capital.
However aside from this shonky accounting, the most significant aspect of Capilano’s official results statement this year is the report of a good Australian honey harvest this winter.
McKee not only reported a good honey harvest, he said that more rain had been the main reason for the increased production levels.
“The improved rain patterns in key production areas has led to a notable increase in honey supply in recent months, with our largest ever winter honey supply for many, many years” he said.
McKee mentioned the improved harvest in connection with Capilano's increased stock levels, which now see Capilano holding nearly 6,000 tonnes of honey in its warehouses.
But it isn't at all clear that Capilano has been buying more Austalian honey this year.
In fact going by what Capilano spent on the compulsory honey levy, which was unchanged from the previous year, most of the extra honey stored in its warehouse is imported.
Capilano's profits have been increasingly dependent on cheap imported honey, and particularly from China.
Its fair to say that in recent years Capilano has flooded the Australian retail market with honey imports, making life very difficult for any competitiors selling more expensive and better quality Australian honey.
Regrettably, Capilano has been less than honest about this import-oriented strategy, telling consumers on its various imported honey brands - such as Allowrie, Smiths and Barnes, that it prefers to sell Australian honey.
Labels on those brands have, for some years now, said that Capilano is selling imported honey only whilst there is a drought and/or shortage of local honey.
Capilano's critics will no doubt feel entitled to call out the company on this hypocrisy if it continues to lable its products in that way, whilst at the same time telling the exact opposite to shareholders and the Stock Exchange.