Retiring director has Zespri plan

Tony de Farias, outgoing managing director of Seeka, will

Changing the way single-desk kiwifruit exporter Zespri operates could increase grower returns by millions of dollars a year, says outgoing Seeka Kiwifruit Industries managing director Tony de Farias.

De Farias says he will "probably" stand for Zespri's board next year to advocate for change.

The 52-year-old head of Te Puke-based Seeka - the sector's largest integrated growing and post-harvest operator - is stepping down in November for a range of personal and professional reasons.

But de Farias said a contributing factor was his ongoing frustration with the current interface between the industry and Zespri.

"We believe there are a lot of things that this industry could do better."

If elected to the Zespri board next year "I'll make no secret of the things that I believe can be improved".

De Farias suggested between $4 million and $10 million could be saved a year - and made available to growers - if duplication of activity by Zespri and supply operators such as Seeka was eradicated.

One example of duplication was how Zespri put a lot of effort into calculating payments to individual growers, and then paid all the money to the growers' supply structures such as Seeka. The supply businesses then consolidated the money and paid it to growers according to their own rules.

Zespri was also involved in areas such as determining what payments should be made for different fruit attributes and industry research. "There's an extensive duplication of that activity taking place amongst the supply companies."

De Farias would prefer to see Zespri dealing with fruit only once it was on board vessels for export, although he had no problems with Zespri doing market-related research.

"In my view Zespri sees itself as the centre of the universe in terms of the total global activity of selling kiwifruit. Our view is that the components of that industry are the growers, the supply companies and Zespri as the marketing arm of that."

Zespri's chief executive Tim Goodacre agreed the company needed to look at parts of the supply chain to see if the industry could reduce duplication and operate more efficiently. Zespri had carried out a supply review and established a supply chain committee - of which de Farias was a member - to look at the issues.

Goodacre was not sure what level of savings might be achieved "but that's certainly a key focus for the industry at the present time". Returns to growers had been squeezed in recent years due to a higher dollar, while it was going to be difficult to keep extracting higher returns from export markets, he said. A new strategic plan for the kiwifruit sector was due to be released shortly by Zespri.

Meanwhile, de Farias said the fact non-growers could hold Zespri shares had the potential to become more of an issue for the industry. Currently growers exiting the industry don't have to sell their Zespri shares, meaning profits can be distributed to non-producers, raising the possibility of resentment from remaining growers.

Goodacre said Zespri's board recognised this and made a multimillion- dollar buy-back offer to so-called "dry" shareholders last year. Shares purchased were offered to "under-shared" existing growers.


Seeka

* NZ's biggest combined kiwifruit growing and post-harvest company.

* Seeka and associated companies will handle more than 27 per cent of NZ kiwifruit production in 2006.

* Only kiwifruit operation listed on NZX.

Source: Seeka