The changes won’t affect Zespri’s single desk marketer position but will give an opportunity to rectify a “growing misalignment” in share ownership in the company, while also giving the group more legroom for research and development. The amendments also aim to enhance the independence and transparency of industry regulator Kiwifruit New Zealand (KNZ).
New Zealand’s Ministry for Primary Industries (MPI) has acted on last year’s review of the country’s kiwifruit regulations, bringing in several changes that have been applauded by Zespri and KNZ alike.
Effective August 1, the changes will mean Zespri shareholders are allowed to consider setting rules around maximum shareholding and eligibility for dividend payments.
In addition, the definition of Zespri’s core business will be expanded.
“These changes will give Zespri more options for promoting the ownership of its shares by active kiwifruit growers,” Minister for Primary Industries Nathan Guy said announced today (July 11).
“They will give Zespri greater certainty for investing in activities such as research and development and in the marketing of New Zealand-grown kiwifruit, and ensuring that Kiwifruit New Zealand has the skill sets it needs to robustly consider collaborative marketing applications.
“These amendments won’t change the industry’s ‘single desk’ export framework, but will provide more certainty for Zespri’s shareholders and growers.”
KNZ chair Kristy McDonald QC highlighted the amendments to Kiwifruit Export Regulations 1999 followed the Kiwifruit Industry Strategic Plan (KISP) process and report, which involved close work between KNZ, MPI, Zespri and New Zealand Kiwifruit Growers Inc.
“The key areas to impact on the work of KNZ are the definition of core business for Zespri, (which is expanded to include marketing, market development, and research & development of kiwifruit), the non-diversification rule, the introduction of two independent Directors on the KNZ Board, and KNZ’s reporting requirements which includes the introduction of a Statement of Intent,” McDonald said.
“KNZ believes that these changes will ensure that the independence of KNZ is maintained, but also build on the work KNZ has been doing to better align its skills and expertise, while also providing greater transparency around our strategic intentions, performance, and funding,” she said.
“We believe we now have the people, policies and procedures in place to provide the independent professional oversight expected of us by the industry and the government.”
She said KNZ would continue to work closely with all industry stakeholders to ensure the amendments are implemented as smoothly as possible.
Zespri Chairman Peter McBride said the updated regulations would enable the company to recommend changes to its constitution to align shareholding of the company more closely with production.
“Our industry asked the government to update the regulations to allow us to develop a sustainable and long-term plan to maximise the wealth of New Zealand kiwifruit growers,” McBride said.
“That means taking action to develop the broadest-possible alignment between total production and shareholding, to strengthen grower ownership of the industry.
In a release, the company said the New Zealand kiwifruit industry had seen a “growing misalignment” between growers who supply kiwifruit to Zespri and people who own shares in Zespri.
One reason is that orchards have been bought and sold but those leaving the industry have not always sold their shares to existing growers.
“A result is that a number of growers do not own shares,” Zespri said.
“Zespri now intends to hold a Special Meeting as soon as practically possible following consultation with shareholders, to ask shareholders to support changes to its constitution designed to improve shareholder alignment, including increasing the number of growers that own shares.
“Zespri plans to support this process by carrying out a targeted share buyback and issue programme next year. These measures require shareholder approval and would come into effect over a number of years. Zespri will communicate further details about the planned recommendations at its annual meeting on 24 August.”
Kiwifruit sales from New Zealand have reached record levels with 137.7 million trays sold in the year to March 2017, worth over NZ$2 billion in export revenue. Global sales revenues are forecast to reach NZ$4.5 billion by 2025.