Changes for kiwifruit rules announced

KNZ chair Kristy McDonald believes the changes will ensure the independence of KNZ is maintained.

The Minister of Primary Industries announced last week that Cabinet has approved amendments to the Kiwifruit Export Regulations 1999.

The amendments are the result of a substantial review of the regulations undertaken by the Ministry of Primary Industry (MPI) after the Kiwifruit Industry Strategic Plan (KISP) process and report.

New amendments to the Kiwifruit Export Regulations will allow Zespri shareholders to consider setting rules around maximum shareholding and eligibility for dividend payments, clarify the activities Zespri can undertake as a matter of core business and enhance the independence and transparency of the independent industry regulator, Kiwifruit New Zealand (KNZ).

KNZ has worked closely with MPI, Zespri, and NZ Kiwifruit Growers Inc (NZKGI) to ensure the amendments provide a balance between providing for industry growth and innovation and regulatory protections.

The key areas to impact on the work of KNZ are the definition of core business for Zespri, (which is expanded to include marketing, market development, and research and development of kiwifruit), the non-diversification rule, the introduction of two independent Directors on the KNZ Board and KNZ's reporting requirements, which includes introduction of a Statement of Intent.

"KNZ believes that these changes will ensure that its independence is maintained, but also build on the work it has been doing to better align its skills and expertise, while also providing greater transparency around its strategic intentions, performance, and funding.

"We believe we now have the people, policies and procedures in place to provide the independent professional oversight expected of us by the industry and the government, says Kiwifruit NZ chair, Kristy McDonald, QC.

NZKGI has played a central role in proactively working with the New Zealand Government on the regulations and New Zealand kiwifruit growers should be pleased that the outcome reflects what growers wanted, says Chairman Doug Brown.

The revised Regulations address three main areas - shareholder alignment, Zespri's core business and the governance and funding of the regulator KNZ.

"The regulations will enable greater alignment between growers and shareholders," NZKGI CEO Nikki Johnson says. "The expansion of the definition of core business will provide stability to Zespri as the industry grows, maximising the wealth of New Zealand kiwifruit growers."

The regulations make significant changes to the governance and funding of KNZ, and while growers no longer have a majority on the KNZ Board, there will be some benefit in having independent expertise available. As supported by the KISP referendum, KNZ now has greater flexibility in funding their operations but also enhanced reporting requirements.

NZKGI will maintain close interest in how the regulations are implemented, particularly with regards to resulting changes to the Zespri constitution that will take place following consultation to ensure the interests of growers are the focus.

Zespri chairman Peter McBride says the updated regulations will enable Zespri to recommend changes to its constitution to align shareholding of the company more closely with production.

"Our industry asked the government to update the regulations to allow us to develop a sustainable and long-term plan to maximise the wealth of New Zealand kiwifruit growers. That means taking action to develop the broadest-possible alignment between total production and shareholding, to strengthen grower ownership of the industry," says Mr McBride.

Over time, the New Zealand kiwifruit industry has had a growing misalignment between growers who supply kiwifruit to Zespri and people who own shares. Orchards have been bought and sold but those leaving the industry have not always sold their shares to existing growers, so a number of growers do not own shares.

Zespri intends to hold a special meeting following consultation with shareholders to ask shareholders to support changes to its constitution designed to improve shareholder alignment, including increasing the number of growers who own shares.

The Government has updated the definition of Zespri's core business in the regulations. Amendments to the Kiwifruit Export Regulations 1999 will take effect on August 1, 2017.