‘Penalties not tough enough’
Penalties imposed against the grower who allegedly provided bud wood from two new Zespri kiwifruit varieties to Chinese orchards may not be tough enough, said Doug Brown, chairman of New Zealand Kiwifruit Growers Inc.
Zespri has terminated the grower’s licence and will remove all SunGold plant material from their orchard; moves which will result in losses of hundreds of thousands of dollars now and into the future.
“The penalties are tough and financially significant. They will be very costly for the grower, given that Zespri is predicting an average orchard gate return of $100,000 a hectare.”
If the grower remains in the industry the only option is to grow green kiwifruit which returns a lower OGR than new varieties.
“If the actions as alleged are proven to be true, then perhaps the penalties are not tough enough,” Brown said.
Last year Zespri received information that its gold kiwifruit varieties Gold3 (Zespri SunGold) and Gold9 (Zespri Charm) may be growing illegally in China and immediately began an extensive due diligence process.
The reports were confirmed late last year, and Zespri contacted New Zealand police regarding a possible breach of Zespri's plant variety rights.
The office in charge of the case, detective senior sergeant Greg Turner said police are not currently investigating the matter, but it remains an open investigation. “Should there be any person in the community with information about this matter police encourage them to provide that information to advance this investigation.
“The investigation identified a suspect living in New Zealand who was licensed to grow the protected variety. As previously reported by Zespri, a licensed grower within New Zealand has had their rights to grow that variety withdrawn.”
Police investigated this matter as an "obtaining by deception" incident, which is a fraud offence. The allegation was that a licensed grower in New Zealand obtained payment by falsely representing that they had the authority to sell rights to grow the protected varieties.
No member of the New Zealand Police visited China during the course of this investigation. There was liaison with New Zealand Police staff stationed in China and with other government agencies
“Zespri maintains excellent networks and relationships across the world. As a result, Zespri became aware of the matter and the identity of the suspect.”
Detective senior sergeant Turner said police will not be commenting on how the bud wood may have got to China.
This is an alleged case, said Brown, however, should it be proven, it is unacceptable for a grower to break the plant variety rights.
“I am personally deeply disappointed and totally back Zespri to enforce the licence penalty provisions to the nth degree. If proven, the actions of the grower have put at risk not only the New Zealand Kiwifruit industry but New Zealand Inc as well as the kiwifruit industry contributes substantially to the New Zealand economy.”
The whole point, said Brown, in Zespri and the industry investing heavily in taking out plant variety rights (known as PVR) is to protect the investment in intellectual property and market advantages the varieties offer all growers.
“In 2016 Zespri spent $13 million in innovation plus another $13 million on new cultivars – which reflects the large investment the industry is making to keep producing the best fruit.
“Enforcement must be carried out. We have enough issues without shooting ourselves in the foot. We have to protect our intellectual property.
“The strength of the New Zealand kiwifruit industry is in our unity and having the best fruit varieties and best quality. If a grower has put that at risk it is very disappointing.
“The industry spends millions each year to bring growers an economic advantage – providing bud wood to someone else defies logic.”
No amount of money to an individual grower can come near what the industry as a whole could lose through new varieties being grown illegally overseas.
Brown said there is no lack of understating as to what growers’ obligations are under the licence agreement. The contract growers sign to grow new varieties is comprehensive and unambiguous in setting out the rights and obligations of growers.
Brown said while New Zealand’s border biosecurity scrutiny for goods coming into the country is strict, he’s now not so sure about oversight of what goes out. “Obviously it’s easier to get plant material out than we would have thought.”
Zespri chief operating officer Simon Limmer said Zespri would not make any details about the grower public but confirmed that Zespri has taken steps against the grower who allegedly provided the budwood from New Zealand to protect the company’s IP and the value of SunGold licences for all growers.
“This includes terminating their licence, dropping their SunGold fruit and removing all SunGold plant material from their orchard. We accepted the grower’s green fruit this season.”
Limmer said Zespri may also take civil action. “We want to send a clear message that we will vigorously protect our IP for growers in New Zealand and offshore. We’re continuing to work collaboratively with authorities in China to determine our options with support of New Zealand government.
“We are investigating whether there are other plantings in China and while we are limited by what we can say without prejudicing these investigations, our work to date shows this is not of significant scale. We’re not releasing details about the illegal planting sites at this stage and the investigations into how the bud wood was transported to China are ongoing.”
Zespri has its own trial sites to grow kiwifruit in Shaanxi Province China, and is establishing a kiwifruit “centre of excellence” there. Shaanxi produces between 40% to 50% of China’s total kiwifruit production.
Limmer said it is important to note that; “without running these growing trials in China, it’s highly unlikely Zespri would have found out about the PVR breach in the first place, as we now have strong working relationships across the China kiwifruit industry.”
“We want to send a clear message that we will vigorously protect our IP for growers in NZ and offshore. ”
Simon Limmer, Zespri chief operating officer