NZ: NZKGI member urges govt to reject industry proposals
Update: Since this article was published, Craig Greenlees has contacted us strongly denying the accusations made against him by Robert Thode. His comments can be found further down in the article.
An elected member of New Zealand Kiwifruit Growers Inc (NZKGI) Forum has urged the Minister for Primary Industries in an open letter to reject proposals put forward by the Kiwifruit Industry Strategy Project (KISP).
In his letter to Minister Nathan Guy, Robert Thode said KISP's proposals - on which growers will vote from Feb. 20 to March 20 - "reduce the already limited incentives for Zespri for perform for the benefit of the industry."
He also urged the government to have a ministerial enquiry into all aspects of the industry, claiming it has not reviewed the current industry regulations once in the last 15 years.
KISP says its proposals are designed to achieve greater alignment between shareholding and production, and would tighten the voting cap such that shareholders are limited to one vote per tray supplied to Zespri.
It also says the proposals would restrict how many shares each shareholder may own per number of trays they supply to a ratio of 4:1, and would give shareholders seven years to come within the cap.
But Thode says the share-tray ratio should be 1:1, and alleges there is a conflict of interest in KISP.
He claims that Zespri grower director Paul Jones and his business partner Craig Greenlees - who is a former Zespri director and a current Zespri representative on the KISP - are large shareholders themselves and "stand to profit handsomely from the changes being recommended."
"There are a lot of growers that are extremely angry about things like the 4:1. There should be full disclosure of all the interests by the people who are running KISP - which includes Craig Greenlees - which should include an up-to-date idea of exactly how many shares he has, both directly and indirectly, and what percentage of those share are dry," Thode told www.freshfruitportal.com.
"The KISP process was meant to be about renewing the industry, and one of the aims was to do alignment. Growers want alignment. They want one tray, one share, one vote – it's as simple as that.
"The government completely mucked things up when it put the regulations in place, because that's of course where everything started from, and things have gone downhill ever since."
Greenlees' response to accusations
Greenlees has since said Thode's claim against him was 'guesswork' based on significant double counting of shares, and also strongly denied that he and Jones stood to profit from the changes.
He said his Zespri share interests were fully disclosed and were accessed by Thode himself, adding Thode had made 'calculation and assumption errors causing his incorrect conclusions.'
Greenlees also wrote an open letter to Minister Nathan Guy refuting Thode's allegation that it was in his interest to establish a 4:1 share to tray ratio - above KISP's initial proposals of 2:1.
"The truth is both Paul and I are significant producers of Kiwifruit in our own right, and also through minority interests and/or Management/Directorships in other entities. Accordingly we have substantial associated or relevant interests in production and so also have substantial relevant interests in Zespri Shares," Greenlees said in the letter.
"In my own case as at June 2014 my relevant interest (disclosed) in Zespri Shares was 3.45 million shares relating to ten entities. The seasonal average production from these same entities was 2.5 million trays. This gives a total ratio of shares to production of significantly less than the KISP initially proposed limit of 2:1 (and less than half of Mr Thode's “guess”) for these ten entities combined, not an excessive level of shares in my opinion, given some growers have chosen to hold no shares for their production.
"Given this ratio is well below the KISP initial proposed and then finally recommended share caps or 2:1 and 4:1 respectively, Mr Thode's accusations of conflicts of interest on this issue are unfounded."
Greenlees also mentioned share purchases made in late 2014, which were refered to by Thode. Greenlees said the shares were purchased by three entities in which he and Jones held minority interests and which purchased significant orchards recently.
"These entities are significantly undershared (i.e. share to trays ratio significantly below 1:1) and aim to be aligned as recommended by KISP. Because Paul is a Zespri Director these purchases were pre-approved under the normal Zespri Director approval process," he said.
Another aspect of the industry Thode criticized in his open letter was Zespri's "monopoly profits", saying profits should be returned to the growers.
"Obviously if Zespri was a listed company everything would be different, but to be honest the standards for Zespri should be significantly higher than a listed company," he said.
"Everything that I'm saying has to be taken into the fact that growers can't make choices to go elsewhere, which would be fine - growers actually want a single point of entry, but we need it to work properly.
"The regulations haven't been reviewed in 15 years, and they really should have been on an ongoing basis. The government refused to allow Zespri to be a cooperative when it was formed, and because the government hasn't kept on top of the alignment issue it's got worse every year."
Thode emphasized his biggest point of contention was that the government was not "doing its job."
"If it's going to regulate and completely control the industry then it needs to do that - it can't set up the regulations and walk away from then as it's done for the last 15 years," he said.
"Growers should be able to know what happens to their money. Simple basic things like that."