Courtroom gets the juice on challenge to Zespri dominance

0 Comments | Southland Times, The, Jul 24, 2010 | by Nick KRAUSE

THE degree of solemnity with which the High Court at Auckland may pass down a verdict has mellowed since the days of black flags and caps, but the gravity with which it deals with its caseloads is no less rich and masterful.

Take this week’s case brought by listed produce marketer Turners & Growers (T&G) – valued at about $155 million on the NZX – against Zespri, the kiwifruit marketer that rings up sales revenues from fruit supplied from 2700 growers here and 1200 overseas.

Seven lawyers have, for four days, presented extremely detailed cases to an astute and distinguished Justice Douglas White. The beef is that T&G basically wishes to sell kiwifruit to whomever it wants and not, as the rules currently state, through Zespri. T&G began proceedings last year. This week’s hearing is a precursor to a full trial set down for next May.

The restructuring of the kiwifruit industry 10 years ago has seen relative peace and acceptance until now.

T&G is challenging regulations governing Zespri’s export monopoly. It wants the right to export its own kiwifruit varieties globally, but the Kiwifruit Regulations 1999 prevent any party but Zespri from exporting beyond Australia. T&G also wishes to commercialise its own varieties, like its ENZARed launched last month. But under the current regime it must go through Zespri.

There are side issues which are said to be rankling even formerly fervent Zespri supporters.

Currency exposures, for example, are said to have been as high as $200m and the subsequent risks carried not by the shareholders but the growers. There is concern over collaborative marketing agreements which are falling, not rising in line with crop increases.

There are perceived difficulties in winning licenses for new varieties from Zespri amid claims larger growers are suffering as a consequence.

Then there is the breakaway Independent Kiwifruit Growers Association chaired by Marcus Wilkins, set up in May “because it has no confidence in the ability of KNZ (Kiwifruit New Zealand) or KGI (New Zealand Kiwifruit Growers Inc) to act as effective watchdogs on the activities of Zespri”.

T&G claims Zespri has abused its position through exclusivity contracts and trying to take control of new varieties. Zespri’s annual meeting next month is expected to be interesting.

But KGI – an interested party to these proceedings – says it has 90 per cent of growers behind it and supports the status quo, a single marketing desk; that is, Zespri with KNZ as regulator
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