The Impact of the Zespri Kiwifruit Export Monopoly on Innovation Incentives

Wed Jun 17 16:24:38 EDT 2009
By James Mellsop, Dr. Lewis Evans, Kevin Counsell, and Will Taylor

In this report for New Zealand produce distributor Turners & Growers, a NERA team led by Director James Mellsop, Special Consultant Dr. Lewis Evans, Consultant Kevin Counsell, and Analyst Will Taylor analyzes the implications of the monopoly held by Zespri -- the world's largest marketer of kiwifruit -- for investment and innovation in the New Zealand kiwifruit industry. The authors argue that the long-term interests of New Zealand kiwifruit growers are best served by having an industry structure that facilitates innovation and investment. Although internationally, kiwifruit sales historically have been dominated by the Hayward (green) variety, New Zealand's competitors are investing considerable R&D across a number of new varieties of green, yellow, and red kiwifruit, many of which have advantages over the Hayward variety. The NERA team assesses the benefits of successful innovations and argues that, if New Zealand is to compete with overseas R&D, the Zespri regulated monopoly needs to be removed.