Growers Can Have Critical Mass With Possible Billion Dollar Fruit Company Suggests Luxton

  • John Luxton
Food, Fibre, Biosecurity and Border Control

"I agree that if New Zealand is to compete in the international marketplace in the food industry it needs some critical mass Minister of Food and Fibre, John Luxton told the Agribusiness Congress in Christchurch this afternoon.

"There is no proposal to destroy critical mass. But as our major international marketing competitors have demonstrated, you can have critical mass without Government dictating to it. Critical mass should be because of good performance and economics, and because growers want to support it.

"Getting politicians out of your industries will help build critical mass rather than hinder it. Currently critical mass in the fruit industry is outlawed. The law basically says we must have two separate entities, with revenue of over $500 million each. It is like requiring the toothbrush producer to have a separate infrustructe from the toothpaste producer, running two separate trucks to every supermarket.

"Perhaps we might see critical mass enhanced in New Zealand's fruit industry as the kiwifruit, apple and pear growers take advantage of possible synergies available when the legislative barrier to having one fruit organisation for New Zealand is removed.

"Some might suggest, why not one commercial fruit company, unconstrained by politicians in Wellington, owned by apple, pear and kiwifruit growers, with revenue of over a billion dollars? "This would give more critical mass, and if it saved even one dollar in costs, it would be a dollar extra in growers bank accounts. I don't want to comment too much on possible outcomes, but I am sure growers who are the owners are doing their sums on that idea.

The Minister said that the issue of so called "single sellers" was a different issue than critical mass. " Actually our producer boards are not single sellers, but rather a "single buyer" of New Zealand growers crops to export. They are one of many sellers in the market place. As Gary Smith says" It is a hugely competitive market place

"While the cut-throat competition in the world market may encourage innovative marketing, there is less incentive for Boards to pass on the best return to their growers who have no alternative after all costs are deducted.