Zespri monopoly must go, says OECD

For fresh produce marketing in Australia and New Zealand
Mike Knowles

BY MIKE KNOWLES

@mikefruitnet

Zespri monopoly must go, says OECD

New report published by international economic organisation favours removal of group's single-desk status

Zespri monopoly must go, says OECD

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A report published by the Organisation for Economic Co-operation and Development (OECD) has called for New Zealand marketer Zespri's single-desk status on the country's kiwifruit exports to be revoked.

In the New Zealand 2011 edition of its OECD Economic Surveys, the group stated that, with large New Zealand companies dependent on exports, regulations needed to "emphasise the minimisation of barriers to international trade and investment".

The report also identified Zespri's virtual monopoly on New Zealand kiwifruit exports as a barrier to trade that must be removed.

In a list of recommendations on how to improve product market regulation in New Zealand, the report encouraged the revocation of "all remaining tariffs and Zespri’s export monopoly on kiwifruit".

According to those who have seen the report, the OECD was particularly critical of the country's product market regulation, arguing that New Zealand's trade performance has been "decidedly mediocre" and the government's approach to competition "lacks consistency".

While the OECD did find that many aspects of the regulatory framework are conducive to competition, it also identified barriers across a range of other areas including kiwifruit exports.

"While most other OECD countries have been focusing reform efforts on problem areas and thereby improving the coherence of their regulatory frameworks with respect to encouraging competition, policy inconsistency has been escalating in New Zealand," the report said.

Commenting on the report, Turners & Growers (T&G) managing director Jeff Wesley said the report echoed the company's own concerns about the serious negative consequences of the government allowing a private company, Zespri, to hold a monopoly over New Zealand's kiwifruit export industry.

"If we are serious about boosting exports, we need innovative new varieties from innovative new players," he argued.

However, the report goes very much against the view held by leading members of the New Zealand government and major opposition party Labour.

Speaking at a kiwifruit industry event held at Parliament Buildings last week, Prime Minister John Key underlined his government's commitment to backing Zespri as long as growers did.

"The destiny of the kiwifruit industry is in the hands of the growers," Key said. "Providing they continue to support Zespri, then we'll be continuing to support Zespri."

Labour leader Phil Goff echoed Key's statement: "It is something that is working and you don't fix it. Deregulation can have counterproductive effects and we think the `kiwifruit` industry does work on behalf of the country."

The OECD report's publication comes in the same week that T&G resumed its High Court battle with Zespri, this time over a number of commercial practices it alleges have stifled competition within New Zealand's kiwifruit trade.

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