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Briefing for the incoming government on the apple and pear and kiwifruit industries

Executive Summary

1. State of Industries

· The apple and pear industry in New Zealand is facing major challenges. Many observers consider the industry has reached a crisis point. An increasing number of growers and others in the industry are questioning whether the export restrictions are in their best interests.

· In contrast the kiwifruit industry is experiencing buoyant returns. Nonetheless, a significant section of the industry continue to press for the freedom to export.

2. Corporatisation

· The new kiwifruit restructuring plan has been approved and is expected to go to a producer referendum before Christmas. Corporatisation is on track for 1 April 2000.

· The apple and pear restructuring plan currently is being assessed by officials. The plan is subject to litigation that is expected to proceed to hearing in early-February.

3. Regulatory Framework

· The regulatory framework is similar but not identical for both industries.

· Mitigation duties are imposed on the new monopsony companies. These are to be enforced by new industry regulatory boards.

· In the apple and pear industry, an export permit regime applies. A requirement to move the point of purchase to ‘Free Alongside the Ship’ (FAS) from 1 February also applies. In addition, ENZA’s onshore logistics business is required to be operated at arms-length from the core monopsony business.

· The new regulatory regime has applied to the apple and pear industry since
1 October 1999. It will apply to kiwifruit from 1 April 2000.

4. The Future

· The new regulatory frameworks are negotiated outcomes and reflect the Government’s decision to retain export controls. The changes do not move the industries to a fully commercial basis and, as such, do not maximise incentives for value adding, innovation and efficiency.

· Although the corporatisation process for both industries is a step forward, industry participants are increasingly realising the limitations of a regulatory-based system and are likely to seek the flexibility to undertake further value-adding activities in the future.

· The Government’s role will be to maintain a watching brief, maintain and, if necessary, improve the integrity of the system in place, and encourage further competitive commercial evolution.

Introduction

5. This paper provides a briefing on two separate horticultural industries: the apple and pear industry and the kiwifruit industry. Both industries are in the midst of substantial reorganisation and change following the passage of legislation by Parliament in September 1999.

6. The regulatory package for both industries is very similar, although not identical. Accordingly, this paper deals with both industries under common generic headings. Where differences exist between the two industries specific comment is provided.

7. This briefing:

· describes recent trends in the apple and pear and kiwifruit industries;

· describes the current changes occurring in the apple and pear and kiwifruit industries;

· identifies the key issues that have arisen or which may arise and the decisions Ministers will be required to make over the next few months; and

· places the new regulatory arrangements in the context of future changes to the industry.

Contact for Enquiries

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