Zespri promises $3 billion in exports by 2025
Zespri Group says it plans to triple its export earnings by 2025 to $3 billion, mainly by boosting the productivity of its green and gold kiwifruit varieties.
Zespri today presented Prime Minister John Key with a copy of its 20-page 2025 strategy at the company's Mount Maunganui offices.
The target was no surprise – Zespri has previously projected earnings of $2 billion by 2020 as part of Horticulture NZ's goal of creating a sector valued at $10 billion –but the company today offered clues to the strategies it is employing.
It wants to broaden its range of cultivars to move growers from increasingly commoditised green types of kiwifruit to higher-value gold – a gold vine can earn twice the dollars a grower can collect from a conventional green vine – and other novel cultivars, gold kiwifruit which provide a wider "window" for sendings from New Zealand, and a sweet green fruit, as well as the potential red cultivars.
Zespri said it would continue its investment in innovation – presently about 2.5% of earnings – and marketing, and boost the land used for vines by about 3200ha.
It plans to maintain current marketing "in particular the stability that the single point of entry [SPE] system allows."
The SPE system is based on Zespri's control of exports outside Australasia. Other companies can export kiwifruit through collaborative marketing arrangements independently approved by industry regulator Kiwifruit New Zealand.
Coincidentally, its public relations campaign came a few weeks before it heads to the High Court at Auckland in a bid to fend off a challenge by GPG subsidiary Turners and Growers.
A three-day hearing from July 20 will initially decide two questions of law: the validity of kiwifruit export regulations giving Zespri a monopoly and whether the High Court has jurisdiction to determine if Zespri has discriminated or failed to allow diversification.
T&G, the company that named and pioneered the kiwifruit industry 51 years ago, has previously broken the control of the former Apple and Pear Marketing Board and in January 2003 took over the pipfruit grower-owned company Enza.
Now, T&G wants to export its own gold, red and sweet green kiwifruit from New Zealand, without having them first assessed in comparison to the returns available from rival cultivars, such as Zespri's.
But Zespri chief executive Lain Jager said the commercialisation of new kiwifruit varieties, a focus on value-added marketing "and a unified collaborative industry structure," coupled with innovative and sustainable orchard practices, would be the key to Zespri's success.
He expressed delight with Mr Key's comments that the government would maintain the Zespri control on exports for as long as growers supported it.
In November last year, the government's 2025 Productivity Taskforce labelled Zespri as an anachronistic legacy of the old producer boards whose monopoly powers should be revoked. It questioned what level of majority grower backing justified a Zespri monopoly.
Agriculture Minister David Carter said last August the government would consider change if it was evident that a "substantial proportion" of kiwifruit growers was in clear support of changes.
The minister who pushed through the 1999 kiwifruit export regulations, National's John Luxton, said at the time that a single kiwifruit marketing desk should continue "without a sunset clause."
Today, Mr Jager said kiwifruit export earnings of $1.07 billion meant that with a compound annual growth rate of 9.8%, Zespri outperformed sectors such as dairy, meat, forestry, apples and wool.
The control on exports allowed the company to focus on market demand rather than on procurement and invest in long-term planning, category expansion, and research and development.