Kiwfruit reputation under threat
HORTICULTURE: Poor export quality is leaving a sour taste with ‘genuinely upset’ overseas customers. Andrea Fox reports
The kiwifruit New Zealand is sending to export markets this year is the worst since some fruit was likened to bland potatoes 20 years ago, and many customers are upset, says Zespri chief executive Dan Mathieson.
In a blunt message to growers and shareholders at the dominant export marketer’s annual meeting, the usually upbeat Mathieson said fruit marred by softness, stains and rots had not fulfilled the promise of the brand the industry spent $1.5 billion building.
“Many of our customers are genuinely upset. These are people we’ve spent decades strengthening relationships with off the back of our ability to deliver consistently great quality fruit.
“The fruit we are sending to market this year is the worst since the quality and taste issues we faced with Hort16a in the early 2000s. That fruit was so bland that the general manager for Asia at the time said he couldn’t sell the ‘potatoes’ we were sending him.”
The Hort16a gold kiwifruit variety was wiped out when the virulent disease Psa attacked the country’s vines in 2010. The new gold variety Zespri Sungold commercialised since has, until the quality crisis of this season, been a global bestseller.
Mathieson flagged changes to Zespri’s growing licence allocation system and hectare availability before next season as part of a review it has started into the quality issues. Sales of licences to grow varieties like Sungold are a major and lucrative earner for Zespri.
On Monday in a grim grower returns forecast, Zespri chairman Bruce Cameron warned NZ’S reputation as a producer of consistent fruit quality was under significant pressure because of the quality issues. The harvest volume this year has also been below expectations.
Mathieson reinforced reputational threat.
“Our reputation for quality, the brand we’ve invested more than $1.5 billion of your dollars in building and our relationships are being damaged. And with that, so too our ability to keep lifting value and support sustainable returns.”
Mathieson said while Zespri’s customers had expected some quality issues because of the pandemic impacts and resulting labour shortage “what we’re delivering is at the worst end”.
“We’re now seeing consumers in China talk about fruit quality on social
the media. Customers who’ve not been in contact with me for many years have reached out to tell me how poor the situation is.”
Mathieson reminded the AGM of the chairman’s Monday grower notice that this year alone, the quality loss cost was forecast to be $2.80 per tray for Sungold, compared with $1.68 last year. For green Hayward fruit, the quality loss cost was forecast to be $1.95 per tray “and this is in a short supply year”.
As the NZ Herald has earlier reported, the best measure for a total sector impact is Zespri’s forecast total fruit and service payments (TFSP), which cover direct returns to all growers.
Last year TFSP was $2.42 billion (excluding loyalty payments) from a total crop of almost 180m Nz-grown trays supplied to Zespri.
The latest forecast is for TFSP of between $2.23b and $2.28 billion (excluding loyalty payments).
Zespri’s global fruit sales topped $4 billion last year. Interestingly, while the quality issue has made headlines this export season, Mathieson said it had “gotten progressively worse over recent years”.
“We have to come together. Zespri’s looking hard at how we respond and help to take the pressure off. One of these considerations is around licence release.
“In releasing licence, we’ve always considered the balance between meeting the demand we’re creating and capturing as much value as possible from the market, alongside the industry’s capacity to accommodate that growth.
“Unfortunately, the pandemic and resulting labour shortage have exacerbated this tension significantly, with the industry continuing to encourage the government to provide appropriate policy settings to allow us to address this shortage.”
Zespri is a creature of statute, entitled by law to be the main exporter of all NZ kiwifruit, except to Australia. It is supplied by around 2700 NZ growers, as well as some overseas producers.
Mathieson said as part of the quality issue review, Zespri would work closely with growers and postharvest operators. It would announce changes to licence allocation and number of hectares available for licence ahead of the 2023 licence release programme.