Will Zespri growers' 'no' vote to more offshore planting upset new FTAs?

Trade and agriculture minister Damien O'Connor. Photo / Mark Mitchell

To the relief of leaders of the $4 billion-plus kiwifruit sector, Trade Minister Damien O'Connor doesn't expect a vote by Zespri growers against expanding the brand's Northern Hemisphere plantings will threaten ratification of new free trade agreements (FTAs) with the EU and UK.

New Zealand's recently signed FTAs are set to achieve the removal of millions of dollars of annual sales tariffs on kiwifruit exports to Europe, and the whisper in the sector after the grower 'no' vote was that ratification of the deals, particularly the EU-NZ FTA, could be affected.

The Herald was told Zespri's existing branded offshore growing operations in Europe were a juicy morsel in New Zealand's negotiations for new FTAs with Europe and the UK.

Responding to the Herald's inquiries, O'Connor in a statement said: "Zespri's decisions about offshore growing are made by Zespri and its growers. The matters related to the recent Zespri grower vote were not an element in New Zealand's recent FTA negotiations, including with the UK and EU.

"Accordingly, while it is not possible to know exactly what issues might be raised through an FTA partner's ratification process, this development is not expected to impact ratification of either FTA."

Zespri is entitled under New Zealand statute to be the main exporter of all kiwifruit, except to Australia. Its statutory privilege is an ongoing irritation to kiwifruit producer Chile in particular, which raised questions in the European Parliament about the EU-NZ FTA deal and continues to challenge what it calls Zespri's "anti-competitive" status with the OECD and WTO.

In response to Herald questions about the possible FTA impact, Zespri chief executive Dan Mathieson said: "Zespri's partnership with growers in Italy and France delivers strong returns to those communities, underpinning jobs and investment and delivering strong grower returns.

"We also work closely with partners there on issues like tackling biosecurity challenges and improving production and therefore grower returns.

"Demand for Zespri kiwifruit is growing strongly and our partner growers in Europe are a critical part of helping us meet that. ZGS (Zespri Global Supply) growers will supply between 21 and 22 million trays this year and that will expand to almost 50 million by 2029 under our existing approved production base.

"We remain committed to that partnership, to delivering for New Zealand and our ZGS growers and we'll work with growers in New Zealand and in our ZGS locations on our next steps."

The NZ-EU FTA deal announced in July includes the removal of tariffs on New Zealand kiwifruit to the EU upon entry, when it comes into force. Zespri paid around $46.5m on tariffs on sales of more than $1 billion into the EU in the 2021 season.

Zespri growers and shareholders this week voted not to support the global marketer's proposal to expand the planted hectares of Zespri SunGold Kiwifruit in overseas countries (excluding Chile and China) by up to 10,000 additional hectares. Plantings are currently limited to 5000ha. The proposal was to support the Mount Maunganui-headquartered global marketer's strategy of being able to offer Zespri-branded kiwifruit to world consumers all year round. New Zealand has a growing season and so cannot achieve that aim alone.

Statutory rules require a 75 per cent vote of grower support for Zespri commercial proposals.

A total of 67.8 per cent of growers and 71.7 per cent by fruit weight voted in favour of the proposal to increase Northern Hemisphere plantings by up to 10,000ha.

A second proposal to allow planting of up to 1000ha of additional hectares of new varieties was supported 70.2 per cent by producer vote count and 73.6 per cent by fruit weight count.

It was the second producer vote Zespri leaders have failed to get over the line this year.

The first was a proposal that Zespri get alongside unauthorised Chinese growers of its best-selling SunGold variety in a branded strategy move. The New Zealand-Zespri developed IP cultivar was smuggled out of New Zealand and now around 7000ha of rogue growing is estimated in China.

Herald inquiries of the grower sector suggest the two vote results, while not a good look for Zespri, aren't a symptom of unrest about its dominant status or performance - more a result of grower focus on issues closer to home, such as a 2022 fruit quality problem and challenging returns for green fruit.