International kiwifruit marketer Zespri has responded to public questioning of its commercial strategy by New Zealand's Indpendent Kiwifruit Growers Association (IKGA), which earlier this week drew the attention of government ministers and journalists to a highly critical letter it had written to Zespri's board of directors on behalf of a small minority of the country's kiwifruit growers.
Following last month's decision by South Korea's Fair Trade Commission (KFTC) to fine Zespri Won427m (US$376,742) for what it described as anti-competitive practices in the Korean market, as well as the recent arrest of a Zespri agent in China over alleged fraud claims, the IKGA said it was concerned that Zespri's international business practices posed a risk to producers' returns.
Speaking exclusively to Eurofruit, Zespri Europe general manager Bert Barmans said the company was disappointed that IKGA representative Ted Meade had opted to make the association's concerns so public and insisted the company was doing all it could to keep growers informed.
He also insisted that growers would not be asked to pay the fine out of their own grower pool payments, but instead it would be covered by Zespri's own corporate funds.
'All of the questions that have been raised by Mr Meade have been well canvassed with growers through many forums,' he explained. 'Zespri has proactively told growers about each of the issues, and has kept the industry up-to-date on their progress.'
'The fact Mr Meade has written a letter seeking further information, but has given Zespri no chance to respond before sending it to a wider audience is unfortunate, because Zespri is happy to meet face-to-face with Mr Meade and go over his concerns again.'
Barmans was keen to remind IKGA and the trade that it had already told growers about the KFTC investigation into its activities in the Korean market as early as June 2011.
'They were told that the investigation may result in a fine of around NZ$200,000, which was the advice Zespri was given at the time,' he told Eurofruit.
'Growers were then proactively told in November that the investigation was finished and it resulted in a NZ$500,000 fine.'
Grower backing
Barmans was particularly scathing on the issue of commissions, an area where Meade had implied Zespri was taking money from growers to pay the fine.
For the 2010/11 season, New Zealand kiwifruit growers exporting their product through Zespri paid a commission of 7.4 per cent.
'Mr Meade talks about the fact Zespri takes a commission as if it is something new,' he said. 'This is the way Zespri has been funded since it was established, all growers know this.
'The level of the commission is outlined in the annual report, it is highlighted at the AGM and it also discussed on grower roadshows.'
The Zespri Europe boss also denied Zespri had demonstrated, as Meade claimed in his letter, a 'lack of transparency and accountability' and was fostering a 'worrying culture of disrespect' towards New Zealand kiwifruit growers.
'Our intent is to compete as hard as we can to return as much as we can to NZ kiwifruit growers,' Barmans commented. 'At the same time we always want to compete within local laws and regulations and to the best of our knowledge we are fully compliant with local competition regulations in all other markets we sell in.'
Zespri currently markets exported kiwifruit on behalf of around 3,000 of the New Zealand's growers and, Barmans claimed, was aware that growers would have differing views on a range of commercial matters.
'We communicate with growers throughout the year through many meetings, roadshows, letters, publications, emails and websites and in doing so we are as transparent and accountable as we can be.
'Other than himself, we do not know who Mr Meade represents and other than a handful of people we do not know who IKGA represents,' he added, before urging Meade to contact New Zealand's largest grower group, NZKGI.
'NZKGI recently had to undertake a public ballot exercise to gauge the level of its support within the industry to collect a levy from every tray of kiwifruit sold,' Barmans observed. 'Of those who voted, 87 per cent voted in favour of KGI.'
Korean appeal
Zespri now has an opportunity to appeal the KFTC decision and the level of fine, but as the end of week 48 the company was still waiting to receive a copy of the full judgement before deciding how to proceed.
'Unless Zespri decides to appeal the KFTC decision, this is the end of the matter,' Barmans pointed out. 'There is no further criminal prosecution.'
The view from Zespri's head office in Mount Maunganui, New Zealand, as well as from its European headquarters in Berchem, Belgium, is that Zespri's Korean misdemeanour is being blown out of all proportion.
'We cannot foresee any impact on Zespri or any other New Zealand exporter from this decision,' Barmans explained. 'The KFTC conducts over 2,000 of these investigations a year and in that regard there is nothing to single Zespri out as a case of particular note.'
Other corporates to be investigated by the KFTC included Microsoft, Bayer Korea, LG, AstraZeneca Korea, Samsung, various international airlines and Coca-Cola, he noted.
