New Zealand kiwifruit growers are practically being forced into long-term business relationships with exporter Zespri, Turners & Growers claimed in court yesterday.
Turners & Growers wants to be able to export without restriction its own kiwifruit varieties internationally.
The hearing, which is expected to finish on Friday, is being held
to determine whether kiwifruit export regulations are lawful and whether the High Court has jurisdiction to determine whether Zespri has breached regulations.
Yesterday, Turners & Growers lawyer Campbell Walker said Zespri wanted to "have its cake and eat it" in reference to its hold over exports outside of Australia.
In Turners & Growers' submission it alleges that apart from forcing growers into partnerships with Zespri, the exporter's grip on the industry was prohibiting kiwifruit growers from exporting their fruit without the company.
The agreement was also stopping growers from associating with any other exporter, and forcing kiwifruit growers to be shareholders of Zespri to increase profits, which the company can deduct from fruit returns. Zespri, under industry regulations, controls exports to countries other than Australia and has promised to triple export earnings to at least $3 billion by 2025.
Zespri has about 2216 shareholders, of which 94 per cent are current growers, and about 2711 suppliers.
A survey in February showed the single-point-of-entry structure was supported by 90 per cent of growers, up from 84 per cent in 2007.
But Walker said growers were being "forced into an intimate relationship" with Zespri.
Walker said this case would be the first the High Court had to determine the Freedom of Association Act in detail.
Chapman Tripp lawyer Neil Anderson, who is not part of the proceedings, said challenges to industry regulations were unusual.
"The reason you don't normally see a challenge is that these issues are normally nailed down good and proper at the outset of any restructuring.
The case provided a great platform to air issues and challenge the merits of the status quo, he said. "It's within the Government's power to close down a legal avenue in the event that they [Turners & Growers] are successful in exploiting one."
