Tensions
within the kiwifruit industry might be reduced following a court ruling that private
sector export proposals require independent Kiwifruit Board assessment. Monopoly exporter Zespri does not have a
right of veto.
Te Puke growers, Splice Fruit and Seeka,
challenged a Board rejection of proposals by Splice to export into Austria and
Seeka into China. All exports outside
Australia require co-ordination through Zespri, the producer-owned co-operative
responsible for kiwifruit marketing.
Zespri is a monopsony, like Fonterra.
It has a statutory monopoly over export sales, except to Australia. Industry restructuring in 1999 established
the Kiwifruit Board, giving it powers to control potential abuse by Zespri of
its monopoly position.
The High Court was told Splice Fruit and
Seeka applied to the Board in 2015 for consent to collaborative marketing
proposals with Zespri: Splice Fruit proposed exporting 180,000 trays to
Austria, Seeka 400,000 trays to Hainan Island and 120,000 trays to Xinjiang
province. Zespri was opposed. The Board rejected all three proposals on
grounds they would compromise Zespri’s present marketing strategies. Justice Heath criticised the Board’s
approach. Its job is to make an
independent enquiry into the economics of proposals submitted. The tenor of the Board’s rejections was to
require Splice Fruit and Seeka to prove their export applications would benefit
the kiwifruit industry. This could mean any
proposal was dead in the water if Zespri was not supportive. This is the wrong way round, Justice Heath
ruled. Collaboration by Zespri is
required if there is Board approval for private sector exports; agreed collaboration
is not a prior factor to be taken into account in determining whether export approval
should be given. If Zespri refuses to
work alongside any applicant, then the Board has to find some way of
implementing an approved proposal, he said.
The Kiwifruit Board and Zespri share the
same building in Mount Maunganui. All
board members have connections to the industry and Zespri. There may be perceptions of bias where a Board
member considering an export application is a kiwifruit supplier potentially in
direct competition with the applicant.
Justice Heath ruled dissappointed applicants are entitled to an “appeal”
consisting of a review of their export application by an independent member of
the Board. This, he said, is far more
cost effective and efficient than the need to go to court.
Splice
Fruit v. Kiwifruit Board – High Court (3.05.16)
16.071