What Zespri could learn from slave redemption

The National Business Review reported on Thursday (paywalled):

Zespri’s board has given the green flag to trial buying fruit grown illegally in China, alongside continuing legal action against one Chinese nursery.

The kiwifruit exporter cooperative has estimated that as much as 4000 hectares of its star cultivar SunGold has been planted illegally in China, mostly in the Sichuan and Shaanxi provinces. The most mature orchards (four-plus years old) are producing about 80,000 trays per hectare and some are producing fruit that is comparable with or exceeds the Zespri standard...

In its September Canopy newsletter, Zespri said that in discussions with the governments of the two countries, it had received “strong advice” to investigate a win-win solution to help mitigate further plantings and maintain the value, and one option was partnering with local Chinese growers.

Chair Bruce Cameron said that the limited trial would involve buying up to 200,000 trays of fruit from a small number of growers. The aim, he said, was to understand “the potential for future commercial arrangements in China, the extent to which cooperation may facilitate enforcement activities for plant variety rights, and the [associated] opportunities and challenges”.

This reminded me of the story of slave redemption in Sudan in the 1990s (which I blogged about here). When well-meaning charity organisations began buying slaves in order to free them, that had a number of unintended consequences. As shown in the diagram below, the addition of charities as a new buyer in the market increased the demand for slaves from from D0 to D1, increasing the price of slaves (from P0 to P1), and importantly it increased the quantity of slaves traded (from Q0 to Q1). So slave redemption actually increased the quantity of slaves traded - the opposite of what was intended.

Now, the case of Zespri is similar to this. If they start buying illegally-grown Chinese kiwifruit, this increases the demand for kiwifruit in China. This increases the profit opportunities for farmers for growing illegal kiwifruit, and so more illegal kiwifruit will be grown.

Admittedly, Zespri is in a tough position, because China isn't known for strong protection of intellectual property rights (which includes 'plant variety rights'). However, further stimulating the market for illegal kiwifruit seems to me like a losing proposition for Zespri.