Kiwifruit Packing Agreement

2017 Trevelyan’s

Having travelled around the sun once again, we find ourselves at the start of another harvest season – a season with its own specific opportunities and challenges. The following agreement sets out the details around packing, while all other company data is contained in this year’s Global Reporting Initiative (GRI) report.

Unlike last year, there has been no need to increase our coolstore capacity, due to a reduced Hayward crop. This is the result of poor winter to flower bud conversion. SunGold growers seem to have had enough flower buds. The area of uncertainty is the reject rate of all varieties. Last year we reduced our base packing rate and increased our reject charges to allow those who present a clean line of fruit to be well-compensated. There are more rejects in the orchards this year than last, which never makes for a great surprise.

We have now completed the road which allows access to the coolstores at the rear of our site, built a new bin pad and remodelled our main car park. With the installation of the new sizer last year, we have enough packing capacity but we have installed Near Infra-Red Technology (NIR) on pack line four. This will allow us to split populations of fruit by dry matter, brix or colour. We are also further developing our in-house software to try and capture inconsistencies in reject rates within maturity areas.

Our fruit inventory continues to be an area we are putting more resources into. Last year, we started an assessment process which encapsulated many on-orchard attributes. The aim is to make sure we optimise the life of each grower’s fruit to point of sale. I believe the process we developed last year played a major part in the extra $3 million that went into the Hayward pool last season. I also believe there is scope to be smarter again, and we have resourced the area appropriately.

The coolstore team mapped results from what they saw when checking or repacking fruit. We are struggling to understand the source of physical damage to the fruit. In working with Zespri’s industry data it appears Trevelyan’s SunGold were one of the less affected by cut fruit. However, our Hayward damage was worse than the industry average. We need to understand these results so will be looking at auditing the area of pre and post clean up sprays being applied to try and understand these findings.

Packing prices are detailed on pg 3 of this agreement. As always,

we aim to keep any rate increases as low as possible. The minimum wage increase of 50 cents per hour has had an impact on packing rates for this season. We anticipate improvements in our throughput of Gold (based on learnings from last season), so have priced in a reduction to the Gold base rate.

I look forward to the packing season ahead and to watch staff rise to the challenges of managing staff and processes which leads to new ideas and helps us work smarter. I encourage growers to take an active role in the picking and packing process so you can fully understand your results.

If there is anything in this packing agreement that you feel needs clarity, please give myself or Steve a call. I wish everyone a prosperous harvest and trust the reduced volume will be more than compensated for by an increased per tray return.

Regards,

James Trevelyan Stephen Butler 0276 488 878 0275 177 999

Trevelyan’s Packing Agreement

2017

Contents2016 Performance Results 2

Work Smart2017 Trevelyan’s Packing Terms 3

Respect our People2017 Industry Structure 8 Staff Representation at Trevelyan’s 9 2017 Packing Commitment Form (loose leaf)

1

2016

Performance Results

TREVELYAN’S ANNUAL VOLUME

GAOBGACKHECKHWOBHWCK

FINAL FRUIT LOSS FOR 2016

Industry

Trevelyan’s

2

Growers will receive1. A Packing Agreement with

Trevelyan’s Pack and Cool Ltd (this document) and

2. A Grower and Supplier Agreement with Trevelyan Growers Ltd. This will be sent once the Zespri Supply Agreement is completed.

Growers will need to sign and comply with these agreements and return them to Trevelyan’s Pack and Cool Ltd.

Money Flow Payment for fruit and service

costs will be from Zespri to Trevelyan Growers Ltd to the grower.

Payment of each grower’s liability for packing, transport, cool storage and administration of Trevelyan Growers Ltd will be made direct from Trevelyan Growers Ltd to Trevelyan’s Pack and Cool Ltd, from grower returns received from Zespri.

Payment of each grower’s liability for logistics will be made direct from Trevelyan Growers Ltd from grower returns received from Zespri.

Packing Charges (Class 1)Packing charges will be calculated by maturity area. There is no charge for Green and Gold Class 2 rejects.

2017 Packing TermsWork Smart

Reject Surcharges 2016 cents per %

0% to 5% $0.01

5.1% to 10% $0.02

10% + $0.03

Fruit Group HW HW OB G3 G14

Base Rate 2016 $1.18 $1.20 $1.92 $1.92

Cost increases for 2017 (labour) $0.02 $0.02 $0.03 $0.03

Gold throughput adjustment -$0.08

Base Rate 2017 @ 0% rejects $1.20 $1.22 $1.87 $1.95

3

Picking The picking system is to be controlled by Trevelyan’s Pack and Cool Ltd. Fruit is to be harvested after a clearance to pick is given by Trevelyan’s Pack and Cool Ltd. Trevelyan’s Pack and Cool Ltd will schedule the time of picking by mutual agreement with the grower. Packing of your kiwifruit will be at Trevelyan’s Pack and Cool Ltd‘s absolute discretion. Timing may change due to weather or other factors.

Trevelyan’s Pack and Cool Ltd is not liable in the event your kiwifruit is damaged as a result of hail, frost, wind, disease or any other event prior to picking or packing.

Where Trevelyan’s arranges the picking contractor, the cost of picking is the grower’s responsibility and will be invoiced by Trevelyan’s to the grower (see chart 1).

A gate fee may be invoiced to the grower depending on orchard location, size of maturity area picked and the need to return to complete the harvest. To move machinery within the area from

Matapihi to Otamarakau, the recommended fee is $150.00. Outside this area a gate fee may need to be negotiated with the harvest contractor. Because of the additional hygiene requirements presented by Psa, harvest contractors may charge a recommended hygiene fee of $25.00 per unit (tractor and bin trailer).

Green and Gold Picking Bonus

The picking bonus for all varieties has been determined by Trevelyan Growers Ltd. This will be detailed in the Grower and Supplier Agreement. The bonus is paid on achieving field audit criteria and packhouse assesment criteria. Hayward bonus is $3.00/bin. G3 and G14 bonus is $4.00/bin.

Bin CardsBin cards will be pre-printed with grower number, variety, growing method and maturity area. Please take care to fill in the bin cards clearly and correctly with a permanent marker pen including:

the pick date

the block name

TransportTransport of bins to and from the orchard will be a cost to the grower and is not included in the base packing rate (see chart 2).

Payment of all transport charges will be made to Trevelyan’s Pack and Cool Ltd by Trevelyan Growers Ltd on behalf of the grower.

KiwistartKiwistart will be:

picked in order of clearance

subject to availability and weekly allocation

subject to the terms of the 2017 Zespri Supply Agreement

Zespri gives only 24 hours’ notice when closing the Kiwistart demand cap. Therefore, some pooling of Kiwistart returns may be necessary for crops picked for Kiwistart that miss the demand cap cut off. Any equity issues will be resolved by Trevelyan Growers Ltd.

4

PackingOn receipt of fruit at the packhouse, Trevelyan’s Pack and Cool Ltd will at its discretion:

a. cure fruit in bins before packing or

b. store fruit in bins in a conventional buffer coolstore

Trevelyan’s Pack and Cool Ltd will:

1. Provide skilled and capable staff in the packhouse.

2. Pack fruit to the Zespri grade standard.

3. Provide packout documentation to growers as soon as possible after packing. This report will reconcile Class 1 and reject fruit to the total kilograms of fruit submitted.

4. Pack fruit held in buffer storage as soon as possible at the completion of the harvest period.

5. Welcome growers to the packhouse to view the packing of their fruit.

6. Be BRC compliant.

7. Pack Class 2 fruit at the packhouse’s discretion.

8. When packing fruit, comply with all relevant NZ laws, codes and standards.

Reject RatesHayward/G14 Reject rates are defined as:

Fruit other than Class 1, size 18 to 46 count and Class 2 (kg)

divided by total fruit handled (kg)

G3 Reject rates are defined as:

Fruit other than Class 1, size 14 to 42 count and Class 2 (kg)

divided by total fruit handled (kg)

Gold 42 M taste band is non standard supply.

Reject SurchargeWhere the reject surcharge applies, it applies to all Class 1 trays packed. Eg: A Hayward crop with 12% rejects will be charged:

Base Rate $1.20

Surcharge 0% to 5% 5.1% to 10% 10%+

$0.05 $0.10

$0.06

Packing charge/tray $1.41

Reject surcharges will be charged at maturity level.

DifferentialPricing for packing is set on the charge for a base pack per variety. The pack category differential as specified in the 2017 Zespri Supply Agreement will be added to the base rate. This equalises the costs of packing different pack types. The cost of the differential charge is funded by Zespri payments.

Class 2Hayward

Base Rate - $1.82 per tray equivalent plus differential

G14, G3

Base Rate - $2.91 per tray equivalent plus differential

The Class 2 rate is a fixed rate with no reject surcharge added. Packaging differential, if any, will be added.

NIR GradingIn 2017 Near Infra-Red (NIR) grading technology will be available in packhouse four. This technology allows us to extract some value from lines where fruit does not meet the minimum taste standard (MTS). It works by predicting the dry

Chart 1

Recommended Picking Rates

Hayward Picking Rates Pergola

Full Contract (Labour and all Machinery) $31.20/bin

G3 and G14 Machinery Labour

Hourly Rate - Labour $24.45/hour

Forklift + Driver $1.50/bin + $24.45/hour

Tractor and Trailer + Driver $95.00/full day +$50.00/half day + $24.45/hour

Contractors may negotiate a contract bin picking rate for G3 with growers if both parties are in agreement and Trevelyan’s has been duly notified. Trevelyan’s picking quality standards must be adhered to.

Chart 2

Transport Charges

Te Puke Area (Matapihi to Otamarakau)

$5.30/bin

Te Puke-No 1 Road $4.80/bin

Other Areas as charged

5

matter of each fruit and segregating the population into high and low groups, to enable the high population to be above the required MTS.

To cover the costs of running the NIR equipment, 7 cents/tray will be charged over and above the base rate for any lines that require NIR grading. To avoid doubt, this extra charge will be applied to all trays in the pack-run, not just the sizes that require NIR grading. When the maturity area to be NIR graded is harvested and the Brix average is under 14.0 and the softs fractile is over 4.0, the extra charge will only be 5 cents/tray. This 2 cents/tray discount is to encourage fruit to be harvested before there are significant issues with soft fruit at packing.

Where there are more maturity areas requiring NIR grading than capacity to pack them, preference will be given to maturity areas that have potential to recover the largest proportion of their crop estimate.

Zespri GAP ComplianceAll growers must have a ZIL grower number and comply with ZIL standards. All growers must be GAP compliant at all times and agree to comply with the GAP PMO documented procedures, policies and where provided, technical advice.

If a grower becomes non-compliant they will go through the grower sanction process as set out by the Zespri GAP PMO quality system. The sanction procedure documentation must be filed in growers’ individual GAP folders for reference if required.

Pests/Stains/Punctures/OtherIf any crops have an attribute that requires the packhouse to operate at a significantly slower than normal rate the grower will be contacted and an hourly rate will be charged to cover Trevelyan’s Pack and Cool Ltd’s costs.

Trevelyan’s Pack and Cool Ltd retains the right to refuse to pack a particular line of fruit.

Fruit Loss PackagingAll reusable packaging arising out of fruit loss will be purchased by Trevelyan’s Pack and Cool Ltd, at its discretion, at 75% of the new season price. Payment will be made to Trevelyan Growers Ltd.

Independent Laboratory ChargesGrowers pay for all clearance samples requested through the independent laboratory.

Samples will be charged at cost and payment for all charges will be made to Trevelyan Growers Ltd on behalf of the grower by way of deduction from grower returns.

PaymentPayment of packing charges pursuant to this Packing Agreement will be made direct from Trevelyan Growers Ltd to Trevelyan’s Pack and Cool Ltd from returns received from Zespri which are payable to the grower.

The grower irrevocably authorises and directs Trevelyan Growers Ltd to pay Trevelyan’s Pack and Cool Ltd for all packing charges payable by the grower.

GSTAll prices quoted in this packing agreement are GST exclusive. GST will be added to all payments when made.

Submit PaymentThe responsibility for payments rests with Trevelyan Growers Ltd. As a guide, the forecast advance payments to growers from Trevelyan Growers Ltd will be:

$0.50/tray equivalent within 21 days of submit.

Payments for picking, transport, packing, cool storage and logistics are required to be paid before further payments are made to the grower. Trevelyan’s Pack and Cool Ltd may, at its discretion, defer some of these payments to provide cashflow to the grower. Further payments to growers will follow progress payments or as funds are received from Zespri.

Orchard ReportsTrevelyan’s prides itself on transparency and open communication with all its growers. Our intention is to continue providing orchard reports to give growers an objective view. We hope this level of service is beneficial to you.

RiskTrevelyan’s Pack and Cool Ltd will not be liable for:

1. Any loss of or damage to the grower’s fruit, except liability caused by any negligent act or omission by Trevelyan’s Pack and Cool Ltd.

2. Failure to make fruit available

6

for supply at any particular time or period except where Trevelyan’s Pack & Cool Ltd is proven to have been negligent.

3. Breach of or failure to perform any of its obligations under this agreement, where such breach or failure is the result of a cause or causes beyond Trevelyan’s Pack and Cool Ltd’s reasonable control.

4. Trevelyan’s Pack and Cool Ltd will ensure its personnel take all reasonable care when visiting a grower’s orchard and when handling growers’ fruit to minimise the risk of Psa spreading. Where all reasonable care has been taken, Trevelyan’s Pack and Cool Ltd, its agents and employees, will not be liable for any loss or damage suffered or incurred by a grower where such loss or damage is attributable to Psa.

Industry TermsTerms defined or used in the 2017 Zespri Supply Agreement have the same meaning in this agreement. The 2017 Zespri Supply Agreement will be available for viewing at Trevelyan’s Pack and Cool Ltd or Zespri’s website www.zespricanopy.com once completed.

Zespri Exclusive SupplierThe grower agrees they will supply all of the grower’s Class 1 kiwifruit, other than Class 1 kiwifruit sold in New Zealand, or exported from New Zealand for consumption in Australia, exclusively to Zespri Group Limited in 2017, as required by the 2017 Zespri Supply Agreement and the

Enhanced Three Year Rolling Grower Contract. Trevelyan’s Pack and Cool Ltd agrees with the grower that it will not knowingly contract with any other grower that does not supply all of their Class 1 kiwifruit, other than Class 1 kiwifruit sold in New Zealand, or exported from New Zealand for consumption in Australia, exclusively to Zespri Group Limited in 2017, as required by the 2017 Zespri Supply Agreement.

Dispute ProcedureAny disputes will be dealt with in the manner prescribed by the 2017 Grower and Supplier Agreement for that type of dispute.

To CompleteThe Trevelyan Packing Agreement commitment form needs to be signed and completed by the grower. A stamped, addressed envelope is included for your convenience.

We at Trevelyan’s would like to take the opportunity to wish you a successful and prosperous harvest.

Yours sincerely

James Trevelyan Managing Director

Stephen Butler General Manager

7

Respect our People

Industry StructureContracts and Parties1. The Packing Agreement Grower and Trevelyan’s

Pack and Cool Ltd.

2. Grower and Supplier Agreement

Grower and Trevelyan Growers Ltd. The grower has an agreement with Trevelyan Growers Ltd. Trevelyan Growers Ltd will act as an agent for the grower and will be governed by elected grower members each year. Trevelyan’s Pack and Cool Ltd will manage Trevelyan Growers Ltd on a day-to-day basis.

3. 2017 Cool storage Agreement Trevelyan Growers Ltd and

Trevelyan’s Pack and Cool Ltd.

4. 2017 Zespri Supply Agreement Trevelyan Growers Ltd

and Zespri. (Option A)

Trevelyan Growers Ltd (TGL) Trevelyan Growers Ltd (TGL) is the grower supply entity which receives all growers’ funds and is governed by grower members elected each year. TGL is the registered supplier to Zespri® in the supply agreement and also represents suppliers to Trevelyan’s Pack and Cool Ltd. TGL is administered by Trevelyan’s Pack and Cool Ltd.

The directors are: (Back L-R)

Colin Olesen - Grower/Chairman

Ian Schultz - Grower

Peter Puchner - Grower

Simon Cook - Grower

Stephen Butler - TPCL

Alister Hawkey - TPCL

Robin Ellison - Grower

(Front L-R)

James Trevelyan - TPCL

Mat Johnston - Grower

Steven Wright - Grower

Terry Newlands - Grower

Jeff Roderick - Grower

Kyle Howie - Associate Director (not pictured)

In the above diagram the Registered Supplier is Trevelyan Growers Ltd.

ZESPRI

TREVELYAN GROWERS LTD

TREVELYAN’S PACK AND COOL LTD

GROWER

8

Jonathan CuttingOrchard Productivity

Manager

Getting to know us

Greg MeyersPackaging & Forklift

Manager

Jodi JohnstoneHuman Resource

Manager

Paula RossFinancial Controller

Maria BrouwersAssistant Operations

Manager

Kelly SeymourGrower Payments

Ross McDonald Kiwifruit Grower

Liaison

Christine DraffinQuality & Compliance

Manager

Christine BroadHarvest Manager

Donna AtkinsonInventory Manager

Mike McCauleyCoolstore Manager

Darold KrullChief Engineer

Daniel Green Kiwifruit Grower

Liaison

Ash LeeGrower Liaison

Manager

Cody BentKiwifruit Grower

Liaison

Dave ParsonsKiwifruit Grower

Liaison

Yvonne SmytheKiwifruit Grower

Liaison

Daniel BirnieAvocado Manager

James TrevelyanManaging Director

Stephen ButlerGeneral Manager

Alister HawkeyExecutive Director

Debbie RobinsonSupply Manager

John LewittOperations Manager

Phil AllisonTechnical Manager

9

310 No. 1 Road, R.D.2, Te Puke 3182, New ZealandPhone +64 7 573 0085 www.trevelyan.co.nz