FOT model may boost kiwifruit returns

Changing the way fruit is delivered to customers in international markets may improve returns for New Zealand kiwifruit growers.

Kiwifruit off loaded from a vessel at Zeebrugge in Belgium is held in a Zespri leased facility.

Using more reefer shipping and Zespri holding fruit in its own off-shore facilities is the subject of on-going industry discussions, says Zespri CEO Lain Jager.

'Currently we use two models,” says Lain.

'In Europe we ship fruit to Zeebrugge where we lease space and hold our own inventory. When customers order fruit we load their truck directly from the in-market store. Some fruit is re-packed to customer's requirements and we have control over fruit quality.” This is a free on truck or FOT model.

The second model is shipping fruit, mainly in containers, to importers who hold and distribute the inventory and any quality issues are a commercial discussion between the importer and Zespri.

Should the New Zealand industry decide to operate FOTs in more markets, Lain says it would be likely Zespri would lease, not own, the handling and storage facilities. The idea is not new and its one which has been the subject of on-going discussion between Zespri its supply chain partners.

'One question for me is if there is a commercial advantage in holding our own inventory off-shore. Would this result in better quality for consumers and better value for the NZ grower? I think it should do. Perhaps a rule of thumb might be that any market over 3 million trays should be FOT? It is a technical question which needs further discussion.”

Other changes likely to affect the New Zealand industry in future is the strategy of off-shore companies to source kiwifruit from the Southern Hemisphere to provide them with a 12 month supply of fruit.

Kiwifruit off loaded from a vessel at Zeebrugge.

Lain says there is nothing to preclude them from growing kiwifruit in New Zealand and collaborative marketing agreements may enable overseas interests to export it to international markets.

However, under the industry's single point of entry marketing status, New Zealand grown kiwifruit can only be marketed to the rest of the world by Zespri, with the exception of Australia which is open to other exporters.

Lain says the NZ Kiwifruit Regulation has provision for collaborative marketing and currently kiwifruit, including non-Zespri varieties, are exported under those arrangements.

'Collaborative marketing, partnerships or joint ventures could be future models for exporting kiwifruit grown in New Zealand by overseas interests.”

This is particularly relevant given the rapid development of large Chinese agribusiness. Zespri understands the rationale behind these agri-businesses wanting to source a 12 month's supply of kiwifruit. It does this itself by growing its own varieties under license in Italy, France and Korea.

'It is no surprise that Chinese kiwifruit companies want to access Southern Hemisphere kiwifruit from New Zealand and Chile for a year round supply.

'The question for New Zealand is how would this be accommodated within the New Zealand kiwifruit regulations and what value would that bring for the New Zealand kiwifruit grower?”

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