Friday, March 29, 2024

China’s kiwifruit growth surging

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In the wake of Prime Minister John Key’s recent China visit Zespri is poised to assert greater control over kiwifruit sales and supply through the rapidly expanding market.
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Key shared centre stage on the visit with Zespri chairman Peter McBride, opening the marketer’s 2016 selling season with fanfare including pantomime Chinese dragons. 

Behind the scenes Zespri’s chief operating officer Simon Limmer predicted continuing double digit growth in the market with this season the first with zero tariffs under the 2008 free-trade agreement.

“The tariffs have been coming down at about 2.5% increments since the agreement started.

“This year also marks the first season Zespri is the importer of record, as opposed to usually selling the kiwifruit free on board onto the ship and passing over ownership from there.”

In light of earlier market structures Limmer acknowledged had been chequered by inconsistencies in importer behaviour and illegal smuggling activity, the new status gave Zespri significantly greater security and control over the crop.

“We continue to own the fruit. 

“We get it onto the ship, across the border and hold inventory. 

“This will increase our responsibility for it, our accountability and our ability to move fruit responding to market changes. 

“We take control of our own destiny.”

The first shipment sailed the week of Key’s visit, to be distributed through the subsidiary Zespri Fruit Systems. 

Limmer said the change in delivery was now similar to those systems used in Europe and Japan. 

It was a delivery method few other primary producers used but one that was essential once a market achieved a certain critical mass.

Zespri was investing $40 million into developing the Chinese market this year and that included establishing personnel presence in two cities far west of the eastern seaboard, in Xi’an and Chongqing. 

The cities had a combined population of 14 million and would take staff numbers on the ground in China to more than 50.

Estimates were for China to earn Zespri $500m this season, selling 40m of the estimated 140m trays now being harvested.

“It has become a significant business in its own right, coming from only 10m trays back in 2011.”

Limmer believed it was becoming an easier country to do business in.

“The Chinese are on a pathway to reducing corruption and making business processes simpler.”

The Chinese themselves grew 1.5m tonnes of kiwifruit, once known as Chinese gooseberries, a year, or three times NZ’s production and represented both potential competition and collaborative opportunities for NZ.

Limmer said the quality of the Chinese fruit was improving and they were becoming more corporate in their approach to growing it.

“As customers they are already big kiwifruit eaters. We don’t have to clear a path with consumers the way we do in say India where they are less familiar with it.”

Zespri also signed a collaborative research agreement with the Shaanxi provincial government on knowledge exchange.

He said it was “almost inevitable” the Chinese would eventually export their kiwifruit.

“They are already a large apple exporter and kiwifruit may be 10 years behind that but that is where they will probably head.”

In 2012 China was the world’s largest apple producer, growing 37m tonnes of apples, well ahead of the next largest grower the United States at 4.1m tonnes.

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