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Quality/Progress Payment Update

On Friday, 20 January, Zespri announced they will not be proceeding with February progress payments for Green and Green Organic growers due to additional costs associated with this poorer Green fruit quality (see full announcement here).

NZKGI formally wrote to Zespri with the request to deliver us an explanation about why we aren’t getting our fruit to market in the great condition that we are used to. This letter can be found here.

Growers have also been asking questions on this topic which NZKGI will place separately to Zespri. These questions are listed below. Growers with additional questions for NZKGI to place with Zespri can be done so via email here.

The answers to these questions are available on Canopy. Click here to view.

• There didn’t seem to be an issue with green in the previous forecast. Why are growers finding out about this issue so late?
• What evidence (photographic or otherwise) will Zespri provide growers of the fruit loss on- and offshore and higher quality claims?
• Why were we a million trays short in Japan?
• Will growers be provided with tangible evidence about the processes which have been followed from orchard gate to market and be provided with evidence about which of these processes have negatively impacted upon fruit quality? In this regard:
  • At which part or parts of the supply chain did the degradation of kiwifruit quality occur?
  • Is it the case that from ethylene on the ships unintentionally ripened the kiwifruit?
  • To what extent are inventory management practices onshore responsible for the quality degradation?
  • To what extent are procurement plans responsible for the quality degradation?
• Is the kiwifruit leaving the orchard in good condition? If growers are found to not be responsible for the bad quality of kiwifruit, why should they be held financially responsible?
• Will the Zespri corporate be cutting corporate costs? If so, by how much?
• Can Zespri bring forward the June loyalty payment to assist with growers cashflow?
• Does the halting of progress payments for green growers include early start growers? If so, is it fair for early start growers to get penalised for losses from stored kiwifruit?
• How will this quality issue be rectified for the 2023 season?
• Is Zespri refining its shipping plan for the 2023 season?
• Does Zespri still want the green category?
• Does Zespri have too many employees?
• Is post-harvest being transparent enough about what they are doing to rectify any quality issues?
• Why are organic growers subject to the same grade standard?
• Is there evidence that organic consumers are as concerned re appearance?
• Will Zespri now suspend the license release of gold license so the industry can catch up with the infrastructure required to handle the vast numbers of gold fruit being grown?
• Is it true that ships were leaving without a full complement of fruit, ships were cancelled or turned around?
• Is it true that there were issues with early start fruit softening in transit?
• The February progress payment is suspended. The December Kiwiflier approved progress payment 15 February for Zespri Green was 0.29c, slightly less than half the 60c per tray Zespri is looking to recover – where does the balance come from? Does this mean no further payments until the 2023 crop is submitted?
• Green growers are competing with gold growers. Each year we are later to be picked, packed and shipped as gold takes precedence. With more gold plantings coming on stream what steps are being taken to ensure that green growers are not further disadvantaged?
• To what extent, if any, are the green kiwifruit growers subsidizing the gold kiwifruit quality issues encountered in the 2021/22 season?
• Have Zespri increased the number of staff auditing quality at packhouse and wharf checks pre loading and sending New Zealand based operational staff to check on ability of European sourced staff to manage the quality in market?
• Zespri purchases kiwifruit FOB stowed. This means that the risk transfers to Zespri once the kiwifruit is loaded on the ship. FOB is an internationally accepted incoterm. On what basis then does Zespri claim back fruit losses when many of the possible causes are outside grower control?
• Has anyone asked for refrigeration records for the kiwifruit once aboard the ship? In the last season, the ships ranged in age from the 1980’s to almost new. Many are in the 20+ age bracket and the risk of machinery breakdowns is proportionately higher.
• Was the export of gold fruit put ahead of the green with the green being held back longer than normal and therefore degrading the fruit and the lesser use of reefer shipping as against?
• Have gold growers been penalised for their poor fruit quality earlier in the season and how does it compare to green growers penalty, if at all?
• Is it time to have a separate marketing association for green growers?
• Any truth in the rumour that green was withdrawn from an Asian market and sent to Europe, to be replaced by G3?
• Why is green left so long in the coolstore, as it appears G3 must be given loadout preference as they have allowed G3 license price to get very expensive, so these growers expect a big return on investment?
• Are the reefer ships we have been using up to standard, have any failed their surveys in the last 12 months?
• Can Zespri provide the info on what happens to fruit that is “rained” into picking bags at harvest over time?
• Going forward, could the industry start at looking at effects that could be caused by fertigation and foilier ferts applied after Christmas, a five year study maybe?
• We need to know at least the percentage from each packhouse of fruit degraded.
• If knowing that fruit quality was a big issue this year, and this was well communicated by the industry as a whole, with major issues well before Christmas, why was there not a decision to stop further exports, thus saving the huge costs of freight, reworking and the massive dumping costs we get slammed with overseas?
• What are your direct recommendations to growers to control some of this fruit loss in the future, particularly 2023?
• Overseas Zespri consumers pay the same price for green as gold kiwifruit. So why do New Zealand growers of green get a much lower rate?
• We certainly get the impression that Zespri do not want green. Why is the gold not getting penalised? Doesn’t gold have fruit loss too?
• How is the “single desk” model helping green growers?
• Have Zespri or others considered deregulating the industry?
• How do Zespri think packhouses will be able to deal with the volume of gold in the future?
• Do Zespri think it’s fair that we find out the payment we are getting each month on the day of payment? Why can there not be certainty earlier in the month (e.g., in dairy indsutry get statement in first week of the month)?
• Zespri want us as growers to take a gamble on buying a red license, but how are we meant to trust them?