Competition Key To Keeping Costs Down

Press Release by ACT New Zealand Primary Industry spokesman Don Nicolson

Wednesday, January 16 2012

Recent comments by kiwifruit cooperative Satara’s departing Managing Director Tom Wilson about ‘Zespri International’s’ brokerage fees raise serious questions about the current legislation that allows Zespri’s export monopoly to exist and whether it is really working to the advantage of growers, ACT New Zealand Primary Industry spokesman Don Nicolson said today.

In his last update to shareholders, Mr Wilson said that brokerage rates of six per cent on gross sale proceeds and six per cent on FOB sales were costing growers between NZ$60m and NZ$140m every year.

“The formation of Zespri was staunchly promoted as being right for the long haul but just like other industries that have tried the same path, discontent was inevitable. Why? Because monopolies become bloated and lazy, with little incentive to keep costs down - Mr Wilson’s comments are a stark reminder of that,” Mr Nicolson said.

“To eliminate the bloated costs Mr Wilson alludes to there needs to be more competition in kiwifruit marketing. Overseas customers have choice in their purchase of kiwifruit and ACT believes New Zealand growers should be free to supply their goods to the exporter of their choice, not have it dictated by Government regulation.

"The deregulation of the apple industry 10 years ago has benefited growers with even the most diehard supporters of the single export desk at the time now supportive of the deregulation process. They do not pine for a return to the single channel marketing structure. ACT believes kiwifruit growers should have the same choice,” Mr Nicolson said.

ENDS

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