Fruit and vegetable prices won’t come down without less regulation, and more competition and production

16 August 2023

The Labour party has announced that if re-elected, it will remove GST from fresh fruit and vegetables. They made this policy announcement just two months out from the General Election on 14 October 2023 and as Parliament begins its final three weeks of sitting and passing legislation, before Parliament adjourns on 31 August 2023. 

While HortNZ is on record as not supporting the move to remove GST (It’s time we talked about GST, HortNZ president, Barry O’Neil in the June 2022 The Orchardist and NZGrower), we are on record as supporting moves to increase competition, for example, our stance on the Commerce Commission’s review of supermarkets, the outcome of which was unfortunately watered down.

As Barry outlined in his June 2022 column, ‘Large, populated countries such as the United States and the United Kingdom have much more competitive food markets with more players at wholesale and retail levels, easier serviceability and the ability to source year-round fresh produce from countries and counties that are close by, keeping prices down. Enormous competitive entities, arising from more favourable business models and huge numbers of customers.’

Barry then went on to say, ‘What I think we can be fairly confident about is that our growers, who are struggling to get a reasonable price when supplying New Zealand’s supermarket duopoly, won’t end up with any more coin in their pockets if GST is removed from fresh fruit and vegetables. And after supermarkets have covered their costs of administering a more complex system, would there actually be any cost savings passed onto their customers?’

This sentiment has been echoed by Vegetables NZ chair, John Murphy, in his interviews on GST and food prices. John has welcomed the debate on GST, saying that Vegetables NZ ‘applauds any attempt by regulators to increase fresh vegetable consumption because of the health benefits’. However, Vegetables NZ is more supportive of ‘fit for purpose regulations that allow vegetable operations to thrive, by encouraging investment in vegetable production and eliminating hurdles that limit productivity’. 

The need to remove unnecessary red tape and form filling came up time and time again at Horticulture Conference Week earlier in the month. While opposition Members of Parliament promised a lot and got great grower support, as we all know, reducing regulation is easier said than done, particularly when in New Zealand, central government regulation is overlaid by regional and local. Plus, reform takes decades and not years, for example, reform of the Resource Management Act is expected to take up to ten years to complete. 

The Aotearoa Horticulture Action Plan’s aim is to double the value of horticulture to $12 billion by 2035. As the plan outlines, this can only be achieved through ‘policy settings that align and enable growers to do what they do best: invest into, develop, grow and market healthy nutritious food in a sustainable manner’.

HortNZ and the wider horticulture sector supports any move that would see an increase in the consumption of fresh vegetables and fruit. However, there are other complex issues that need to be addressed at the same time, which is why a more targeted approach is likely to be what’s ultimately needed. 

In the lead up to the General Election, HortNZ will be redoubling its efforts to increase candidates’ understanding of commercial fruit and vegetable growing in New Zealand, and what must happen if we are to achieve our goals by 2035. Policies that are only about attracting votes and not about addressing the fundamentals holding industries like ours back are not going to ‘cut the mustard’, so to speak.