Asian black market in kiwifruit costs legal growers millions

By PHILIPPA STEVENSON agriculture editor

Illegal kiwifruit exports to China alone are estimated to be undercutting growers' returns by up to $3 million a year.

Kiwifruit marketer Zespri says the Asian black market is widespread and getting worse.

This week, an Australian-owned company is to appear in the Auckland District Court charged with exporting nine containers of kiwifruit between July and October last year in breach of export regulations.

The Ministry of Agriculture and Forestry case against Oak Shore Holdings, a five-year-old company registered in Hamilton but owned by Australian James Craig, of Victoria, is the first prosecution of its type.

Zespri chairman Doug Voss says illegal exports are especially damaging in Asia, where Zespri is establishing new markets in countries such as China.

He says prices are good as a result of big spending on promotion, but the effort is being undermined by other New Zealand kiwifruit selling for $2 or $3 a tray less than Zespri's fruit.

"All it does is create price expectations at a lower level. That's New Zealand fruit creating its own price competition."

The amount can only be guessed but could be 500,000 trays a year. In China alone the cost in lost sales to Zespri could be $2 million to $3 million a year.

'That's forgetting about places like Singapore and Southeast Asia."

Voss said the industry felt strongly that "the rest of us go to all this trouble - why should a relatively small group riding on our coat-tails put fruit in there and ... make a good return [when] they are not meeting all the promotional costs or the other overheads.

"They are taking that money off the rest of the New Zealand industry."

Kiwifruit can be legally exported to Australia, and the industry can tolerate small-time re-exporting of containers of New Zealand fruit bought on the Australian market.

The problem occurs when exports are shipped directly from New Zealand ostensibly to Australia, but in reality bound for other markets.

Zespri can estimate where illegal fruit comes from by examining packhouse profiles for gaps in expected sizes and volumes.

Surveillance at the Port of Brisbane last July and August detected 26 containers, or about 150,000 trays, which never made it ashore but sailed direct to Southeast Asia.

Voss said that discovery was probably the tip of the iceberg because the surveillance was done for only two months at one Australian port.

Zespri passes information about other New Zealand fruit in markets to the Ministry of Agriculture and Forestry, which decides whether to investigate or prosecute.

"All we can do is go on our contacts in the market to ... track it back," said Voss. "You can do a paper trail trace on it, and that's obviously what's been done in the Oak Shore Holdings case."

He said a successful prosecution by MAF against an illegal exporter should be a deterrent.

"We very much encourage [prosecution], and so do the bulk of kiwifruit growers."