New association of concerned growers seeks transparency
A new kiwifruit growers association, formed earlier this month, is questioning the cosiness of the industry structure.
The Independent Kiwifruit Growers Association (IKGA) wants to see more accountability and transparency in the handling of grower concerns and funds.
Their spokesman, Tauranga lawyer Marcus Wilkins - who runs a family orchard at Pongakawa - said the association's members have no confidence in New Zealand Kiwifruit Growers Inc (NZKGI) to address grower concerns or in the ability of Kiwifruit New Zealand (KNZ) to adequately monitor the performance of Zespri under the export regulations.
A Katikati grower, Ross Hart, is the grower liaison contact for the association, which claims to have significant members.
"You have a cosy corner," said Mr Wilkins. "The guardians of the industry (NZKGI), the regulator (KNZ) and the marketer (Zespri) are all living in the same building. It's hard to ask the penetrating questions of Zespri."
The inaugural meeting of the IKGA resolved to ask Zespri:
To adopt a payment structure similar to that operating in other primary industries. This would see growers regaining control of crop proceeds and having returns remitted to them sooner each year, rather than having a 14-month wait.
To address the issue of dry shares, where shareholdings are not related to production and grower funds are used to pay dividends to shareholders who are not growers.
Mr Wilkins said Zespri was not a true growers' co-operative - "there are some growers who are not shareholders and therefore don't get a return on their investment through dividends."
This came about when orchards were sold and the previous owners kept the shares.
Mr Wilkins said Zespri was operating as a monopsony, where one buyer faces many sellers. As the only purchaser of kiwifruit, the "monopsonist" may dictate terms to its suppliers in the same way that a monopolist controls the market for buyers.
Underlying IKGA's dissatisfaction is the plight of the green kiwifruit growers.
Many of them are struggling to break even, and they are wondering how they are going to get their heads above water.
Mr Wilkins said the fruit was harvested in April-May and payments were drip-fed through the year with a final wash-up the
following June, nearly 14 months later.
"Green growers are looking at options to survive and they need the money before Christmas to help their cash flow," he said. "They are pinning their hopes on new varieties, but in reality a lot will miss out.
"They won't be able to plant them because they have run out of money or have too much debt," Mr Wilkins said. "If gold kiwifruit is so good, why hasn't Zespri released more?"
He said IKGA was not attacking the single desk exporting system. "We are more than happy for this to continue with Hayward green. But I do have sympathy for those who want to plant their own varieties and sell them on the open market.
"We just want to see more transparency and accountability in the industry. We don't have confidence in the structure to monitor what is going on. You'd be surprised how many disaffected growers there are."
Carol Ward, Zespri's director corporate and grower services, said payments were made to growers "as soon as we possibly can, but the calculations are not straightforward."
Between April and September Zespri funded payments through a credit facility, and October onwards from the cash receipts of sales.
Zespri, which sells $1.5 billion worth of kiwifruit, makes monthly payments to growers, and early in the season it even makes weekly payments.
Ms Ward said 94 per cent of the shareholders were growers and it was an ongoing challenge to ensure growers get the maximum return from the marketplace.
She said Zespri took any concerns seriously - "it's quite a consultative industry and there is a thorough review process in place."
Mike Chapman, NZKGI chief executive, said "we have a structure that allows every view to be represented through the forum, which meets up to eight times a year."
NZKGI has 37 members who make up the forum, comprising 25 regional and district representatives and 12 from industry groups, all elected every three years by growers through a postal ballot.
The kiwifruit industry has a total of 2700 orchards and about 3500 growers.
Mr Chapman said NZKGI was working with Zespri to simplify the payment system. "It's not about speeding the payments up, but making them clearer so growers can see what is happening."
On the question of being located in the Zespri building, Mr Chapman said NZKGI was in a better position to monitor performance and keep in touch with what is happening.
'Cosy' kiwifruit structure queried
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