Andrea Fox: Putting squeeze on last monopoly

Opinion

It's hard to beat agribusiness for lusty, brawling corporate stoushes.

Think PPCS' campaign for meat company Richmond; Craig Norgate's hunt for Wrightson; dairy industry politics, and one of the gnarliest of them all, Tony Gibbs' overthrow of the Apple and Pear Board and Enza exporting monopoly.

Now Guinness Peat Group's main man in New Zealand has declared war on our last remaining produce export monopoly, Zespri Group, controller of a kiwifruit export industry worth around $800 million a year. The only real surprise is it's taken him so long.

As GPG-representative chairman of listed fresh produce heavyweight Turners & Growers, Gibbs growled at T&G's recent annual meeting that Zespri was getting too big for its already-oversized boots.

Gibbs-watchers needed no translation: Standby for incoming missiles.

It's been more than six years since Gibbs and GPG shareholders slayed the Apple and Pear Board and merged its marketing arm Enza with T&G, a 112-year-old fresh fruit and vegetable grower and seller.

Today T&G claims to be responsible for 25 per cent of total kiwifruit exports (through negotiated deals with Zespri). In the interests of New Zealand Inc, Gibbs says it's time to send the last export monopoly to the grave.

This time he's using new tactics, delivering directly to Cabinet ministers and party political leaders a weighty "position paper" and report by independent economic consultants gravely underlining the potential economic losses and risks to "NZ Inc" of a continued kiwifruit export monopoly. Last time round, he variously and colourfully bought, seduced or scolded growers into his free market camp.

A wily veteran of corporate takeover campaigns, Gibbs' isn't striking during a recession for nothing. His meticulous commissioned reports, received in the Beehive last week, peddle the notion that New Zealand is missing out on potential big export dollars and valuable kiwifruit R&D investment because of a greedy, non-competition zone called Zespri. The message will hit a Government committed to boosting New Zealand's economic productivity to counter recession squarely in the solar plexus - as intended.

And with national interest feelings running high, Gibbs will be sure to make mileage from Zespri calling on nearly 3000 growers to dump green kiwifruit because of a global slump in demand - at a time when T&G had identified new markets, but had its applications to export turned down.

(That there is an acknowledged oversupply of green fruit that Zespri needs to manage to avoid a price collapse will be lost in all the shouting to come.)

Gibbs will further stoke nationalist sentiment by claiming Zespri flouts a statutory limitation by contracting to acquire and sell "substantial" quantities of overseas-grown kiwifruit.

He will play public hardball with claims that Zespri alone determines how much of the annual crop it is prepared to buy; on what terms; who it will sell to; and what price it will return to growers. And he'll shout from the rooftops that Zespri acts solely in the interests of its shareholders "preferring the interests of its shareholders to those of the New Zealand kiwifruit industry and the economy as a whole". He'll say Zespri has no obligation to take all fruit (Fonterra is obliged by law to take all milk offered to it); that regulations governing it are so "weak" they might as well not exist; that he has evidence of Zespri abusing its privileged position.

He'll claim that while Zespri by law is obliged to nurture "collaborative" marketing ventures with other parties such as T&G, it is "hostile to all collaborative proposals".

He'll highlight the latest annual report of Zespri's policeman, export regulator Kiwifruit New Zealand, which shows the average returns from "collaborative" efforts beat Zespri's by 37c a tray in the 2007-08 season, and in 2006 by 14c.

He'll even provide fodder for the conspiracy theorists, arguing that Zespri sees deregulation looming and is abusing its dominant position in preparation.

The T&G position paper to Government claims Zespri is growing a "war chest" by having growers, supply entities and post-harvest operators sign "loyalty contracts" that will bind them to supply Zespri exclusively.

Agribusinesses, whether the hunter or the hunted, tend to make a real meal of conflict. Hawkes Bay apple growers tried to pummel Gibbs' camp with the fruits of their labours in that stoush.

But apple growers were tired and grumpy anyway, feeling short-changed by their own industry.

Kiwifruit growers will give Gibbs more of a run for his money.

Their national president Peter Ombler said when asked if they are ready for a Gibbs assault: "I'd sooner stick to what we are good at. We have no reason to think our industry is exposed to risk because it has been so successful, and I think it can count on being successful for a very long term.

"Ultimately, if growers want this structure, it will stay."

* Andrea Fox, one of the country's most experienced agricultural sector journalists, will write regularly on agribusiness while agriculture editor Owen Hembry is on leave.