Zespri’s $1million loss in Europe is a warning sign of a company losing sight of its key marketing objective, says Seeka Kiwifruit Industries Limited’s managing director Tony de Farias.

Zespri has revealed that they have lost in excess of $1 million dollars operating their yearround supply strategy. Zespri says the losses are due to their inability to source sufficient Italian kiwifruit during the New Zealand off season to fulfil their selling programme.

New Zealand kiwifruit growers will pay for these losses in the form of lower dividends from Zespri and the associated risk-management company Kiwifruit International Limited. “Kiwifruit growers are now seeing the costly result of Zespri being distracted by local issues, rather than staying focused on their vital marketing function,” says de Farias. “The kiwifruit industry has enjoyed a sustained period of strong returns. Combine this with Zespri’s lack of transparency, and we have an environment where Zespri can easily conceal losses to their supplying growers. The sheer size of Zespri’s losses in Europe means they now have been forced to tell the industry.

The question worrying growers is how often they have been able to hide other losses. It also brings in question Zespri’s governance structures and their ability to manage operations in a commercial environment. “Zespri’s result in Europe is of concern to all growers. The New Zealand kiwifruit industry needs a company totally committed to marketing kiwifruit. Unfortunately we are once again seeing Zespri spending a lot of time and energy on local issues, rather than fully managing their marketing function.

“Zespri is currently trying to directly contract with each individual grower. While their objective of securing long-term supply is excellent, their method of using direct grower contracts means Zespri is once again focussing on what is happening in New Zealand. Direct contracts also bring additional costs to growers, while failing to harness the efficiencies generated by the current commercial supply structure.

“Seeka and our supplying growers have proposed a single collective contract which not only gives Zespri a secure supply of fruit, it will also reduce costs. Most importantly a single collective contract means Zespri can totally focus on marketing kiwifruit,” says de Farias.

Background information

Processing more than 15 per cent of New Zealand’s total kiwifruit production, Seeka is New Zealand’s largest integrated kiwifruit supplier servicing the Bay of Plenty’s major growing regions of Te Puke, Tauranga and Katikati.

For harvest 2004, Seeka will be employing more than 1200 people to get 11 million trays of kiwifruit picked, packed, stored and then shipped to Zespri’s international markets. Seeka’s outstanding record for corporate governance, plus transparent business processes, lead to Seeka being selected for the NZAX First XV – as one of the first 15 companies to be listed on the NZAX.