• John Luxton
Associate Minister of Agriculture

Associate Agriculture Minister, John Luxton, today announced that the Government has made regulations to deregulate the provision of supply services for the kiwifruit industry from the coolstore to the ship. The regulations come into force in seven days time on 1 April 1998.

Mr Luxton said today 'These regulations will give growers choice and allow them to negotiate the services they use from the orchard right through to loading the fruit onto the export ship. They also provide for suppliers to be responsible for the quality of their kiwifruit for up to 10 days following discharge."

The regulations confirm six key changes to the operations of the New Zealand Kiwifruit Marketing Board, know as Kiwifruit New Zealand (KNZ):

- providing for the Board to acquire fruit from suppliers other than producers;
- shifting the point the Board takes title of fruit to the ship (free on board stowed, FOBS);
- providing for the Board to make charges for fruit loss up to 10 days following discharge in the destination port under certain specified circumstances;
- increasing the number of factors for price setting;
- rationalising fruit quality provisions and including process standards; and
- allowing the Board to establish a supply chain management company but requiring the Board to divest this company within 2 years.

"The key objectives of these regulatory changes are to increase the consistency and quality of the New Zealand kiwifruit export product in the market and to maximise the incomes of kiwifruit growers,' Mr Luxton said.

"In the lead up the making of these regulations, the industry generally expressed concern about suppliers having little or no control over the fruit from FOBS yet remaining responsible for fruit loss for up 10 days following discharge in the port of destination.

"In response to these concerns, and in the interests of fairness and equity to suppliers, the Government has included in the regulations a number of requirements the Board must meet.

These include requirements to:

- establish in consultation with industry, and publish, a methodology for inspecting fruit off shore;
- undertake the first inspection of the fruit within 10 days of discharge;
- advise suppliers of a significant fruit loss within 5 days of first inspection (what constitutes a 'significant' fruit loss is to be established in consultation with industry);
- advise any suppliers of a fruit loss charge within 12 days of first inspection; and
- provide any suppliers disputing a fruit loss charge with evidentiary documents if requested within 15 days.

'If KNZ misses any of these deadlines it cannot make any charge for fruit loss on those fruit. In addition, if a dispute is pursued by a supplier, it is up to the supplier to select the course for resolving the dispute and KNZ is required to then participate. However, if these processes are not concluded within 30 days, then KNZ may make the deduction for fruit loss but without prejudice to any ensuing litigation.

'These comprehensive checks and balances on KNZ will ensure the industry is involved at the outset in the processes KNZ intends to put in place to deliver on this component of the package of measures,' Mr Luxton said.

In the other key area of concern, relating to the establishment and ongoing operation of KNZ' s supply services company. Mr Luxton said he was expecting further clarification of aspects of the supply services company's establishment and operation.

'The Government has sought assurances from KNZ in several areas in relation to the supply services company, including establishment costs and processes, ongoing objectives, controls and costs. I understand KNZ is close to finalising this information for Government,' Mr Luxton said.

'This completes the first of a two stage approach relating to implementation of Stage 3 of the Kiwifruit Industry Review completed in late 1995. Corporatisation of KNZ is the second part of the process. Officials will commence work shortly on assessing KNZ's proposals,' Mr Luxton concluded.