Zespri gets green light to convince more kiwifruit growers to be shareholders

Zespri is entitled by law to export all New Zealand kiwifruit, except to Australia.

Zespri has the kiwifruit industry’s all-clear to proceed with plans to entice more growers to become shareholders of the global exporter and marketer.

New chairman Nathan Flowerday said following strong support at an industry advisory council meeting, Zespri would proceed with work to support a first set of initiatives announced by the Zespri board in December.

The initiatives will be offered from next year and include offering growers the opportunity to receive their June loyalty payment from this year’s harvest season as shares, and enabling them to reinvest dividend payments as shares.

Less than 50 per cent of Zespri’s 2800 kiwifruit suppliers own shares in the company, which is entitled by law to export all New Zealand kiwifruit, except to Australia.

Nathan Flowerday, Zespri's new chairman.

Industry alignment between growers and shareholders is viewed as a major issue facing the Bay of Plenty-headquartered marketer.

As Zespri leaders this year launched grower information sessions about owning shares, Craigs Investment Partners research analyst David Harris said industry alignment “is one of the biggest issues Zespri faces”.

Grower advocate NZKGI (NZ Kiwifruit Growers Inc) has told the Herald the industry “recognises there is an alignment issue with growers’ ownership of Zespri”.

Zespri is owned by past and current kiwifruit growers. It is the horticulture sector’s export leader, posting a global operating revenue of $4.2 billion in FY23.

Flowerday, who succeeded retiring chairman Bruce Cameron last week, told growers in an update both initiatives would be provided on an opt-in basis, with the January loyalty payment remaining a cash payment.

The advisery council had also approved required changes to Zespri’s 2024 loyalty agreement to enable the share initiative.

“This is a positive step for the industry as we look to lift the numbers of growers who are Zespri shareholders, with the initiatives reflecting the feedback we’ve had that growers want to avoid initiatives that are mandatory or require large one-off payments,” Flowerday said.

The board would provide updates on the ongoing work over the coming months.

While growers don’t have to own Zespri shares to supply the exporter, one of the arguments is they miss out on plump returns from Zespri businesses outside its basic fruit returns obligation. Observers say for Zespri itself, the cost of the imbalance was seen in late 2022 when the company’s proposal to expand overseas Zespri-branded fruit production was lost in an industry vote.

Craigs’ Harris said a successful vote on the plan to expand branded gold fruit production from 5000ha to 15,000ha “would add significant value to Zespri, so the outcome has been disappointing for shareholders”.

However, observers also note the proposal was put to a vote at a time when all growers were struggling with major orchard issues at home, including a post-Covid labour shortage, extreme weather events, emerging fruit quality issues and steeply rising costs.

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.