New report on NZ’s regulated kiwifruit export structure for grower eyes only?

New Zealand's multibillion-dollar kiwifruit export industry is regulated, with Zespri being the main exporter.

A new report examining Zespri’s statutory right to be the main exporter of New Zealand kiwifruit is being kept under wraps until growers hear its conclusions later this month.

The report was commissioned by grower advocate New Zealand Kiwifruit Growers Inc (NZKGI), which says it wants growers to hear about it first at upcoming sector roadshows.

All NZKGI will say is that the report on the “single desk” export structure “is balanced and has no surprises”.

“Any further communication about the report is yet to be decided.”

The grower group would not say what prompted it to commission the report, when it was requested or who wrote it.

New Zealand’s $4 billion-plus kiwifruit industry is regulated. The Kiwifruit Industry Restructuring Act 1999 and the Kiwifruit Export Regulations 1999 set the current industry structure and established Zespri as the primary exporter of New Zealand-grown kiwifruit to all countries other than Australia. The arrangement is known as the “single point of entry” (SPE) or single desk.

The Ministry for Primary Industries has not received the new report. It would follow up with NZKGI, a spokeswoman said.

New Zealand Kiwifruit Growers Incorporated chief executive Colin Bond. The grower group requested the report, but will not say why, or who wrote it. Photo / Quinn O'Connell

A Zespri spokesman told the Herald the global marketer had seen a draft version of the independent report. The company, which is supplied by about 2800 New Zealand growers and 1500 offshore contractors, would comment when the report was made public.

Meanwhile, it said the single desk or SPE was “incredibly important to the industry”.

It helped to build a world-leading fruit brand, to expand the category internationally and to deliver value for growers.

“There have been a number of reports on the SPE over the years which have helped provide an independent view on the benefits of our structure along with the challenges. These have helped us ensure we continue to succeed on behalf of our growers.”

The kiwifruit regulations make some provision for other marketers to export kiwifruit through collaborative marketing arrangements with Zespri, although this amounts to a relatively small proportion of New Zealand’s overall kiwifruit exports.

The regulations also specify the functions of industry regulator Kiwifruit New Zealand.

Growers voted in the Kiwifruit Industry Strategy Project referendum in 2015 when more than 97 per cent voted in support of the industry structure. This referendum resulted in the Kiwifruit Export Amendment Regulations 2017.

According to NZKGI literature, the real commercial beginnings of the New Zealand kiwifruit industry were in the 1960s. The export market during that time was composed of individual growers, grower co-operatives, exporters and distributors.

An attempt to develop a joint marketing effort saw the establishment of the Kiwifruit Export Promotion Committee in 1970, followed by the Kiwifruit Marketing Licensing Authority in 1977. The authority had the rights to establish market standards such as fruit size, quality and packaging of kiwifruit for export markets. It also acted as an adviser to the government. This gave growers some control over licensing exporters.

In the 1980s, NZKGI says, other countries began to export kiwifruit and New Zealand lost its first-mover advantage.

The seven licensed exporters in New Zealand were in fierce competition, driving down prices. This reduced grower profitability and caused fluctuations in both supply and demand.

A referendum was held in 1988 and growers voted to move from multiple exporters to a single-desk system. The New Zealand Kiwifruit Marketing Board came into being in 1989-90.

In the 1992-93 season, as a result of various governance and management factors, the board got into serious difficulty, says NZKGI. In response, the industry put in place a three-stage review that incorporated major structural change.

The result was NZKGI, which became operational in 1994, the creation of the Zespri brand in the 1996-97 season and Zespri as a separate marketing and sales organisation, and an industry restructure after a referendum in 1996-97.

The industry restructure resulted in the 1999 legislation and regulations. On April 1, 2000, Zespri Group was launched with the official corporatisation of Zespri and the single-desk status remaining.

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.