Report on the success of kiwifruit export regulations

New Zealand’s kiwifruit industry operates under a ‘Single Desk’ structure whereby government regulations establish Zespri as the primary exporter of New Zealand-grown kiwifruit to all countries other than Australia. This arrangement is commonly referred to as the Single Point of Entry (SPE).

In 2015, New Zealand’s kiwifruit growers participated in a referendum, of which 97% voted in favour of the SPE structure. Now eight years later, NZKGI commissioned a report on the SPE to explain the Single Desk to new growers. The report was produced by BERL, a leading provider of a broad range of economic research, analysis, advice and consultancy who analysed the benefits, costs and barriers of the SPE arrangement.

The report finds that the SPE has created a brand that can manage kiwifruit quality and quantity to deliver high returns to kiwifruit growers.

NZKGI CEO Colin Bond says, “It is reassuring for our growers that this report recognizes the value that the SPE has brought the New Zealand kiwifruit industry over the last 24 years. Growers have long supported the SPE as a cornerstone of the success to our industry and the independent report we have commissioned continues to back this.”

The report finds that Zespri-marketed green and SunGold kiwifruit draws a 10-20% higher price than competing varieties in international markets. Further, while the volume of kiwifruit exported has increased 299% since 2000, export receipts have outpaced volume, increasing 571%.

The growth of the value of the kiwifruit and apple industries were also compared, assessing grower’s net income (Orchard Gate Return, or OGR). The report found that while apple grower’s OGR had increased from $43,600 to $49,000 per hectare between 2015 and 2019, kiwifruit OGR had outpaced apples by 64%, increasing from $60,800 to $107,100 per hectare during the same period. Also, in terms of capital, 2020 data found that sampled kiwifruit orchards were substantially more valuable, and hence profitable, at $928,700 than the sampled apple orchards at $275,300 per hectare.

While the report was favorable towards the SPE, it did find some limiting factors such as the potential to disadvantage smaller groups of growers. Such issues may occur when a set of rules are created under the SPE. “One example is the mechanism used to acquire license to grow SunGold kiwifruit, says Colin. The tender can be prohibitive to those who do not have sufficient capital.”

Other noted barriers of the SPE were that the Producer votes required to be undertaken by growers to decide on important industry decisions may restrict a rapid reaction by Zespri to respond to changing market conditions. There was also a notable barrier created by Zespri shareholders who are a minority of all growers, meaning that growers are unable to vote and exercise a degree of control over Zespri to which they would otherwise be entitled.

The full report is available below.