Kraft Heinz, which owns the iconic NZ Watties brand, has announced it is closing its local frozen vegetable processing facilities and ceasing its arrangements with local growers. Watties’ coffee processing under the Greggs brand and dips under the Mediterranean, Just Hummus and Good Taste Company brands will also close. At least 350 direct employees will lose their jobs, with many hundreds of contracted growers around the country also affected. By doing so, Kraft Heinz is shutting down multiple local growing and manufacturing food operations with a history extending back over 100 years.
Kraft Heinz is a multinational company whose commercial interests do not coincide with those of NZ. Kraft Heinz announced it is making the massive cuts “in order to position itself for the future”. This is a euphemism. It does not appear that the operations being closed are necessarily unprofitable. Kraft Heinz has decided it will be more profitable to source its production in large overseas facilities and then import the product into NZ under its locally recognisable Watties brand. Kraft Heinz is in the business of creating a global monopoly. Having purchased our NZ production facilities and brands, it is closing them down, in favour of producing in countries overseas where workers are low-paid and/or the scale can be larger. Kraft Heinz has not announced that it will offer our local production facilities for sale as a going concern, in this way it will ensure that local competitors cannot start up.
This is anti-Kiwi, about as far from our Kiwi interests as you can get. We are a nation whose economic well being is founded on efficient high quality agricultural production. Instead of exporting food produced here in NZ, we are increasingly becoming dependent on buying from overseas growers. When Watties local production ends there will be a net loss to the NZ economy of local employment and export earnings. While the cash used to buy overseas will also affect our balance of trade. This is also occurring at a time of increased global conflict and uncertainty, which, without local production, could directly impact our food self-sufficiency.
Moreover, NZ will no longer be in charge of regulating the safety of growing conditions, processing and packaging, raising the possibility of contamination. Historically, imported frozen produce has caused outbreaks of the Hepatitis A virus and norovirus in NZ. Contamination can occur during the growing or harvesting process, often due to deficient hygiene standards or the use of contaminated water/soil. Up till now, this has largely affected imported frozen berries, but the move to overseas frozen vegetables raises a possibility of wider problems in our food chain.
What are the alternatives?
NZ can grow its own agricultural exports and boost profitability by looking to grow quality produce for high value markets as has happened with A2 milk and Lewis Road Creamery for example. There are opportunities for local manufacturing to add value to the produce. The global market for organic foods is projected to grow rapidly from NZ$240 billion in 2024 to NZ$365 billion in 2034, a compound annual growth rate of 7.4%. Growers being set aside by Kraft Heinz can look to transition to organic production and alternative local processing to jump start a commercial advantage, secure local employment and improve healthy Kiwi food options. Kraft Heinz should have investigated this possibility and held discussions with growers
A word of caution, any competitive edge for kiwi organic production would be negated by the introduction of genetically modified crops in NZ as envisioned by the Gene Technology Bill currently before parliament. Coming on top of food production being moved overseas by multinationals like Kraft Heinz, the Bill’s passage would constitute a double whammy for our economy and health. Overseas buyers looking for premium quality produce would shun our produce including organic goods if we abandon our current GE Free status.
The Kraft Heinz case highlights the deficiencies in our current government thinking. Since the late 1980s successive governments have been addicted to the concept of a free global economy. But the commercial landscape of the global economy is shifting. Huge multinational companies have access to virtually unlimited financial investment which they are using to gain control of NZ production and manufacturing assets. Once they have secured ownership, they can close them down in order to shut out competition. Simultaneously our supermarket duopoly is squeezing its suppliers including the purchase of cheaper lower quality products overseas for its own brands. This has no doubt played a role in the Kraft Heinz decision.
The NZ government needs policies to protect our local assets from being acquired by predatory multinational companies seeking monopoly positions in the global food economy and in other economic sectors. Many of our trade partners subsidise agriculture, we don’t. These subsidies are being used to gain monopoly positions. Multinationals like Kraft Heinz work with these countries.
Our national assets should not be sold off to overseas interests. The global economy is not going to protect our local economic and health interests. The closure of Watties’ operations is throwing our farmers and food processing industry workers under the bus. If you want to make your voice heard, write to your MP, and Watties itself. To drive the point home we could stop buying Watties, Heinz and Kraft brands, but be aware that the alternative brands being offered by supermarkets are likely imported. We need Kiwi First thinking from our government. Premium local organic production is the key to protecting our clean green Kiwi image and unlocking a sustainable economic advantage to secure New Zealand’s future.
