Zespri picked to join deregulation line

By PHILIPPA STEVENSON agriculture editor

The last of the producer boards, monopoly kiwifruit marketer Zespri, is picked to be deregulated within three years.

The forecast comes from Joe Pope, for 13 years the head of the Apple and Pear Marketing Board, which last October, renamed Enza, was the latest of the major boards to lose its single-seller status.

Pope, chief executive of the pipfruit sole-seller during its "coming of age", joined the board when it was a $160 million-a-year business. When he left in 1996 it was clocking turnover of around $900 million.

Enza, which faced competition from about 50 other exporters this season and is believed to have exported less than half the 19-million-carton crop, is likely to be taken over by Turners & Growers this year.

Enza chairman Tony Gibbs indicated recently that following the takeover, Turners & Growers, which he also chairs, would look to add kiwifruit to its export fruit basket.

Pope, who after leaving Enza served on a ministerial advisory group during the time of the reforming Producer Board Project Team, is confident Zespri will be deregulated within three years and Gibbs will get his wish.

"It's the last export monopoly in New Zealand," he said. "When we had the Dairy Board there the small industries were safe, but the Dairy Board has voluntarily changed [into Fonterra] and Zespri's ready to change. If you look at their [business and ownership] structures they've made sure they can keep going after deregulation."

He said a producer board structure might be sensible, but it was not sustainable in the prevailing political climate, with the push for deregulation coming from Government officials and disaffected sectors of the kiwifruit industry.

Pope is still heavily involved in horticulture. His positions include the chairmanship of HortResearch, logistics company GoReefers Southern Pacific, the Wellington Rugby Union and the boards of the New Zealand Symphony Orchestra, Anzon Energy and fresh fruit technology company Fresh Appeal. He served on the Trade New Zealand board for 10 years.

The apple industry's first year of deregulation in a strong market was very forgiving of mistakes.

"It was a brilliant first year to have," said Pope, while warning that "it will be tougher after this".

Competition led to less co-operation and exporters tended to be "lemmings".

"We follow each other all over the place. The new exporters are putting product exactly where it always used to go. They are not opening up new markets, and there are not a whole lot of new markets waiting to be opened up.

"Enza was the biggest apple marketer in the world by a country mile. To achieve that you don't leave a whole lot of markets unsatisfied."

Pope predicted the industry would become smaller, more efficient and return less to New Zealand, but some people would do very well "because we produce good apples here [that fetch] quite a high price".

Problems were likely to emerge in the next decade from lack of investment in HortResearch's world-leading apple variety breeding programme.

Enza has restricted its spending on research and development, and HortResearch - which owns the intellectual property but recently suffered Government funding cuts that forced it to make 41 of its 500 staff redundant - has searched worldwide for other funders to keep the apple breeding programmes going.

Pope said involving overseas interests meant some benefits would go out of New Zealand, but at least the capability would be retained here. The industry in this country was not prepared to fund the work, which was tantamount to cutting its own throat.

"It is the world-class fruit programme so it would be crazy to move away from it."

Some local export groups intended to do their own breeding programmes but overall there would be less money spent, said Pope, describing the development as one of the prices paid for deregulation.