Grower reporting and contracts
Grower contracts and the detail behind your returns
As growers consider packer and exporter arrangements for the season ahead, understanding how returns, costs and deductions are calculated is just as important as where fruit is marketed. This article outlines key contract and reporting considerations, including the different ways exporter returns may be presented and interpreted.
Under the industry EMS, growers must have contracts in place with both their packer and exporter. As growers consider arrangements for the coming season, it is important to understand not only where fruit will be marketed and packed, but also how returns, costs and reporting are calculated and communicated.
Packer-grower and exporter-grower contracts are commercial agreements that determine how your fruit is harvested, packed, marketed, shipped and ultimately paid for. While commission rates often receive the most attention, growers should also ensure they understand the full range of deductions, charges and reporting methods that influence their final orchard gate return.
Ultimately, growers retain authority over how their fruit is handled and marketed. The contract is the mechanism that sets out those arrangements and responsibilities across the supply chain.
Key elements to consider
Before signing contracts for the season ahead, growers are encouraged to seek clarity on both operational expectations and financial reporting. This includes understanding:
- Exporter commission rates and how they are calculated
- Marketing costs and what activities they cover
- Exporter costs and any additional administration or market charges
- New Zealand market commission structures and domestic market costs
- Packing and packaging charges, including any variable costs
- Logistics and freight costs across the supply chain
- Checking industry levies and fees are accurately accounted for
- How different fruit classes are managed, sold and costed
- Who carries responsibility for insurance, quality claims or in-market losses
- Whether fruit is pooled and how pool rules apply
- Payment timing, progress payments and final payment schedules
- Harvest expectations, timing and any obligations relating to supply plans
Grower reporting
Growers should also ensure they clearly understand the reporting format used by their exporter and packer throughout the season as updates and within their end of season reporting. Different reporting methods can create very different interpretations of returns.
For example, growers should ask whether seasonal updates or reporting is provided as:
FOB (Free on Board) returns
Represents the value of fruit at the point it is loaded for export before international freight, insurance and many destination market costs are applied. Growers should ask what costs are still deducted after FOB is reported, including freight, insurance, market charges, commissions, claims and other supply chain costs.
CIF (Cost, Insurance and Freight) returns
Represents the sale value of fruit delivered into the destination market including freight and insurance costs. Growers should ask what costs are deducted after CIF is reported, including exporter commission, marketing, in-market costs, claims and levies.
Coolstore Door (CSD) returns
Represents the value of fruit at the point it leaves the coolstore before many downstream export and market costs are applied. Growers should ask what costs are included in the CSD calculation and what additional deductions still occur after CSD reporting.
Gross sales values
Represents the total fruit sale revenue before deductions. Growers should ask which costs are excluded from the figure and what deductions will still be applied before final payment.
Orchard Gate Returns (OGR)
Represents the estimated or final return to the grower after applicable supply chain and marketing costs have been deducted. Growers should ask exactly which costs are included within the OGR calculation and whether all deductions have been accounted for.
Net returns after costs and commissions
Represents the final amount payable to the grower after commissions, freight, packing, marketing and other charges are deducted. Growers should ask for a full breakdown of deductions and clarity on any variable or additional costs that may still arise.
Reporting expectations
Understanding which costs have already been deducted, and which have not, is critical when comparing exporters, pools or market performance. Asking for clear examples of how returns are calculated can help avoid confusion or frustration later in the season.
Growers may also wish to discuss what level of market and sales reporting they expect during the season, including transparency around market performance, inventory levels, quality claims and pool outcomes.
Taking time to understand the detail within contracts before signing can help ensure expectations are aligned across the grower, packer and exporter for the season ahead.
Historical examples of exporter reporting
Login to view the examples of reporting formats historically provided by exporters to help growers better understand how returns, costs, commissions and other deductions may be presented across the supply chain.