Monday, April 22, 2024

Zespri mulls post-China vote options

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Zespri intends to scale back its ambitions to run commercial trials with Chinese growers after failing to gain sufficient support from New Zealand growers to push ahead with the programme.
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The kiwifruit marketer required 75% grower support to undertake a programme with Chinese growers that included low volume commercial trials using Zespri protocol and marketing. A grower vote netted 70.5%.

The programme was an exercise aimed at working with Chinese growers who have planted unauthorised SunGold kiwifruit, originally sourced illegally from plants supplied out of NZ.

The SunGold (G3) area in China has expanded rapidly and largely through the Sichuan province, to cover over 4000ha. It is expected the area of unauthorised plantings will eclipse the 7500ha in NZ within two seasons.

Chief grower, industry and sustainability officer Carol Ward says Zespri could continue to run its research and development programme in China that has been under way for some years, without the commercial element attached.

“The problem is not going away and is only likely to increase. We are concerned about the impact of the volume of this G3 fruit on our retail space,” Ward said.

While grown out of season to NZ’s SunGold fruit, the Chinese variety is still expected to impinge on about 30% of the NZ-grown fruit still in market when the local variety is harvested.

Zespri’s own estimates are that the Chinese growers could have between 30-90 million trays of class one equivalent fruit in the market over the coming five years.

“We will have a multi-pronged attack from here. We can run a small R&D programme without the commercial trial. We will also continue to build relationships with central and local government authorities and the Chinese industry and talk to NZ authorities on our options,” she said.

China has been viewed as a growing area that could provide a good volume of fruit to help growers maintain year-round shelf space in overseas markets. At present, Italy is providing the bulk of off-season SunGold fruit.

“Year-round supply means we can spread our marketing investment across a broader time period and the same would apply if we were growing in China. The question now is how to do it,” she said.

She says it was encouraging to see acknowledgement coming out of China about the value of plant variety rights, backed by strengthened consumer brand and patent protection rules.

Ward says it was unfortunate more growers in NZ had not been able to visit China to appreciate the scale of the plantings that have gone in the ground there.

Beijing-based trade and investment advisor David Mahon says the Chinese had reacted positively to the grower vote, despite it not getting the required 75% support.

“It showed the majority of kiwifruit growers supported the proposal and they (China) do not see it as a defeat at all, more as an issue that has to be resolved,” Mahon said.

He says it was accepted that many companies required 75% support for major decisions to get over the line and the vote was not far short of it.

“I still think the strategy is correct. Perhaps it was a case that those who were against it did not have a chance to see what has happened up here. Had they done so, that could have made a difference,” he said.

He says the Chinese respect the decision that has been made. They appreciated growers’ caution about making such a move, in contrast to some of the more rushed decisions other NZ companies have made with respect to their China investments.

“The media coverage here has been more about how NZ growers have confirmed their relationship with China,” he said.

Mahon says next steps will need to be thought through carefully by Zespri.

“Unless there is some way of managing it, the damage will be considerable to SunGold fruit sales from NZ. But there is a way,” he said.

“If you are a domestic-based business with a strong local partnership you can enforce your rights with greater strength. And there is an opportunity for growing fruit out of season, as is done in Italy, but not at the volume capable here.

“If NZ does not do it, the Chileans will.”

He maintains growers who voted against the trial in China have voted “against something that has already happened”.

The area of SunGold fruit in the ground may even eclipse NZ’s by next year.

United States company Driscolls has successfully managed to establish a successful berry growing business in China and aims to triple its fruit production by 2025 in response to enormous local demand.

Company executives have cited China as having the potential to be as big, if not bigger than the United States for fresh berry consumption.

“So lots of companies can and are doing it,” he said.

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