Zespri shareholders and producers vie for overseas expansion and profits

A kiwifruit grower says shareholders benefit from overseas expansion, but growers don't.

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A kiwifruit grower says shareholders benefit from overseas expansion, but growers don’t.

Kiwifruit growers say they have rejected Zespri’s plans to expand orchards overseas because only shareholders will benefit.

Zespri growers recently voted against expanding SunGold kiwifruit orchards overseas to up to 10,000 hectares.

Zespri said the growth would have ensured a year-round supply of kiwifruit to overseas markets under the Zespri name.

Only 67.8% of winegrowers were in favor of increasing the number of hectares. Under kiwifruit export regulations, a 75% vote was required to pass a resolution.

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Growers also had voting rights weighted by the amount of fruit they grew. Only 71.7% of voters by fruit weight voted in favor of the expansion.

A The kiwifruit grower, who wished to remain anonymous because he feared repercussions from kiwifruit exporters, said only shareholders would receive a commission on kiwifruit grown and sold overseas.

The grower represented a family trust that produced half a million trays of kiwi fruit a year. A tray contained 30 fruits.

New Zealand growers paid around $750,000 per hectare per year for a SunGold license. Foreign growers failed to pay for cultivation licenses, the grower said.

THE RETAIL/RNZ

Kiwifruit growers are mulling a radical plan by Zespri to try to stop the explosion of its illegally grown SunGold brand in China.

But Zespri shareholders received more commissions from foreign producers than they received from local producers, he said.

Because there was a limit on license sales, commissions and dividends from overseas sales became a priority for shareholders, he said.

If Zespri saw itself as a global brand and supplied fruit of the same quality out of season, it would hurt the premium local growers received as kiwifruit would become mainstream, he said.

When Zespri was created in 1999, it was to sell New Zealand kiwifruit and to be owned by local growers. New regulations have changed that, he said.

New Zealand Kiwifruit Growers chief executive Colin Bond said he was surprised growers were focusing on the risk and not the reward of having 12 months of storage space.

Colin Bond, Managing Director of New Zealand Kiwifruit Growers.

NZKGI/Stuff

Colin Bond, Managing Director of New Zealand Kiwifruit Growers.

Northern hemisphere growers could supply the market for the few months that local growers couldn’t, Bond said.

Having fruit on the shelf for an entire year meant that Zespri could control the relationship with retailers and control shelf space.

But Seeka chief executive Michael Franks agreed with the producer that the increase in overseas production has benefited Zespri shareholders rather than growers. The majority of producers were not shareholders.

Franks said having storage space for 12 months had its benefits, but kiwifruit grown overseas were generally of lower quality.

Seeka's managing director, Michael Franks, said if overseas growers supplied poor quality fruit, it could damage Zespri's reputation.

Seeka / Stuff

Seeka’s managing director, Michael Franks, said if overseas growers supplied poor quality fruit, it could damage Zespri’s reputation.

“The question is whether it is better to have only seasonal fruits.”

There was a reputational risk if substandard foreign fruit was on the market, he said.

Zespri chief executive Dan Mathieson said the result was disappointing.

Overseas growers supplied kiwifruit to markets under the name Zespri Global Supply.

It has been estimated that these growers will supply between 21 and 22 million trays of Zespri SunGold kiwifruit this year. Based on existing plantations, it would increase to 45.5 million trays by 2029.

A second vote on expanding new varieties overseas of just 1,000 hectares also failed, with growers’ vote tally of 70.2% and a result of 73.6% by fruit weight.

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