Counterfeiting in the Primary Industry Sector and the Threat to New Zealand’s Economy

Authors: Ball, R. & Quirke, S.
Published in National Security Journal, Volume 1, Issue 1, October 2019

much wider sense.39

New Zealand Apples and Pears

According to online data sources New Zealand apples and pears’ export values in 2018 were NZ$745 million and were expected to reach the NZ$1 billion mark by 2023.40 Export markets for the industry are evenly divided between the traditional markets of North America and Europe and those emerging in Asia and the Middle East.41 According to its industry body, New Zealand Apples and Pears, counterfeiting of its products has occurred in European markets since the 1980s.42 Back then, the method of counterfeiting was relatively basic; purchase a pallet of boxes containing New Zealand apples, sell the New Zealand apples, then repeatedly refill the boxes with cheaper Argentine or Chilean fruit and sell at premium prices.43 During the early 1990s the industry introduced what was then an innovative anti-counterfeiting initiative. Like Zespri, Price Look Up (PLU)-code stickers were applied to each piece of fruit in an attempt to show authenticity, and the labels reduced counterfeiting, but did not solve the problem, as the stickers themselves could be counterfeited (‘Tampered’).44 New Zealand exports 30% of its total pip fruit harvest to China. Asian pip fruit counterfeiters follow a similar modus operandi; selling cheaper local or imported apples as New Zealand product because the brand command higher prices.45 Similar forms of counterfeiting continue today in international markets with fruit purchased from wholesalers and transferred into New Zealand apple brand boxes, or more often, cartons produced offshore (‘IP Misuse’).46 In addition to ‘Simulated’ cartons, the introduction of ‘new’ varieties not grown in New Zealand is an additional form of ‘Counterfeit’ activity identified within the industry.47 Opportunities for further illicit enterprise occur when growers supply product to the wholesale market directly. ‘In country’ agreements with importers now provide a better control of the supply chain, however, with advanced technology it is now possible to store fruit for much longer periods. This provides the opportunity for either northern or southern hemisphere countries to supply markets with ‘Adulterated’ product disguised as New Zealand country of origin.48 New Zealand Apples and Pears agree that although counterfeiting has a detrimental effect on the wider primary industries, its primary concern is centred on the phytosanitary quality of the fruit. It is the ultra-low residue levels, combined with good biosecurity practices and relative absence of pests and diseases that gives New Zealand product its premium status. Counterfeit fruit with high residues not found in New Zealand – ‘Simulated’ counterfeiting – could at the same time pose a potential serious health threat and reputational risk for the industry.49 New Zealand Apples and Pears believes “the possibility does exist,” for nonstate organised crime to exploit supply chain vulnerabilities that potentially would have a detrimental economic impact upon the wider industry.50 As is the case with the wine industry, individual pip fruit businesses or companies manage counterfeiting issues themselves. To this end the industry is unable to provide an estimate of financial losses incurred through counterfeiting. However, unlike New Zealand Wine and Zespri, New Zealand Apples and Pears does assess counterfeiting as an organised crime activity.51