New Zealand Kiwi Growers Say US Penalties Are Unjust

THIS summer United States shoppers can buy three New Zealand-grown kiwifruit for a dollar. Or, they can buy five Chilean kiwifruit for the same price.

The reason for the price difference is a two-year antidumping investigation by the United States Department of Commerce and the US International Trade Commission, which resulted in a penalty of 98.6 percent on New Zealand kiwis.

The effect on the kiwifruit growers "is unbelievable," says Murray Higgs, chief executive of the New Zealand Kiwifruit Marketing Board. He says the whole problem is the result of a US trade bureaucracy that does not understand the marketing of the little furry brown fruit.

Mr. Higgs predicts New Zealand shipments to the US will drop drastically over the next three years - the time period for the penalty. For example, the country will ship 4 million trays this year compared with 5.4 million in 1991 and 6.9 million in 1990. New Zealand grows more than a third of the world's kiwis; 10 percent of its crop goes to the US.

With the harvest just ending, the decline in US shipments will force growers here to sell more of their fruit to other countries. "It will disturb all other markets," predicts Higgs.

The reason for this unhappy tale is a mistake by the New Zealand Kiwifruit Marketing Board, he says.

In December of 1990, the board loaded a freighter, the Pioneer Reefer, with 700,000 trays of kiwifruit for Japan. After sitting on the dock for seven days while the board negotiated with an importer, the ship sailed. But the Japanese importer reneged on the contract when the ship was four days from New Zealand with the perishable fruit.

The board ordered the captain to sail to Seattle, partly because of limits by the shipping company and partly because the kiwifruit markets were still comparatively firm in the US. "In hindsight, we should have just dumped the fruit in the pacific," Higgs says.

Instead, the fruit was sold in the US, where California growers were one month into their harvest. Higgs says he believes the shipment from the Pioneer Reefer was the factor that prompted the West Coast growers to bring the antidumping action. However, the International Trade Commission, in its final report issued in May, noted that New Zealand kiwis had shown a "dramatic" increase in volume and market share during the 1990-91 marketing season.

The ITC report noted that the amount of time available to sell California-grown fruit had been compressed by the imports from New Zealand.

Normally, the ITC would look at the cost of kiwis in New Zealand. But New Zealanders consume less than 5 percent of the fruit sold. Instead, the ITC decided to take Japan as its base market, reasoning it was a similar market to the US. New Zealand sells about 20 percent of its kiwis in Japan.

Higgs says the Japanese market was not comparable to the US market. He explains: "In the US we sold the fruit ourselves. In Japan, we had no presence in the market; we sold through importers who set the price. In addition, we sell large fruit to Japan and that is sold to consumers on single trays. In the US, we sell smaller fruit which is marketed in loose-filled boxes." The difference in marketing means less manpower is needed to sell in the US. The Japanese also tend to pay more for imported fruit, con sidering it more of a luxury item. "California kiwifruit growers themselves sell to Japan at prices well above US prices," Higgs noted in a letter to customers. Despite these objections, the ITC used Japan, finding that kiwis in Japan sold for more than kiwis in the US. This finding was critical to the final decision, which also considered the cost of production in New Zealand and the harm done to the US industry.

The decision is perplexing to kiwifruit growers in Kumeu. At a meeting in this fruit-growing area, about 20 farmers are gathered around a large table discussing the action. "What I can't believe is that the most powerful nation on earth has a system that can do this to New Zealand," says Glen Dye, a local grower.

There is no question New Zealand kiwifruit prices will be higher in America for the next three years because of the penalty and the stipulation that kiwifruit be sold no cheaper than the price in Japan. The marketing board, however, will finally have some control over the Japanese situation. It has established its own marketing company to sell the fruit.