Seeka chasing insurance payout over fruit losses

Seeka boss Michael Franks says the company has been advised it has a robust insurance claim over fruit losses attributable to the fire at its Oakside packing facility .PHOTO/FILE

Seeka Kiwifruit Industries this week submitted a multi-million dollar insurance claim for fruit losses attributable to the fire that severely damaged its Oakside packing facility in Te Puke in March.

The claim, under its marine cargo cover, was the result of an extensive investigation into the cause of losses that resulted from unexpectedly high rates of fruit ripening for some of the Hayward Green kiwifruit packed by Seeka, said chief executive Michael Franks.

Seeka had already lodged claims in June to its insurers for material damage to buildings and equipment, and for losses due to business interruption. Those claims had been accepted and were currently being quantified and finalised, said Mr Franks.

"We have professionally worked through what has happened and transparently kept our growers and Zespri informed throughout," he said.

The investigation concluded that the affected fruit had been held in wooden packing boxes. Although they were swabbed and cleaned after the fire, the wooden boxes had been affected by residual autocatalytic compounds that had accelerated ripening, Mr Franks said.

By contrast Gold (G3) fruit handled by Seeka during the same period, which had been stored in the new blue plastic bins, were unaffected. Seeka has ordered another 9000 of the plastic bins.

"We have strong supporting scientific documentation and have been advised by our experts that we have a very robust claim," said Mr Franks.

Seeka's insurance adjustor understood growers' concerns and expectations and had advised he would let the company know next week on the exact timing of its decision on whether to accept the claim, he said. The decision was expected before Christmas.

Seeka packed 27.7 million trays of kiwifruit in the 2015 season, a record for the company. The total was up 11 per cent on its forecast and up 30 per cent on the previous season.

Chairman Fred Hutchings told a stakeholders meeting in Tauranga this week that Gold volumes were expected to continue increasing. He also noted the increase in yields for Hayward Green from Seeka's catchment area of growers. The average yield had gone from just under 7000 trays per hectare in 2002 to 11,700 trays per hectare in 2015.

Mr Hutchings said feedback from growers suggested the jump in yield for Green had resulted from a number of factors, including learnings from vine disease Psa, improved orchard hygiene, and better climatic conditions over the past couple of seasons.

"We had an excellent six months to June 2015," he said. But uncertainty over the outcome of the insurance claims caused Seeka last week to widen its August full year profit forecast from an increase of 30-40 per cent, to 10-40 per cent, on last year's $3.2 million after tax.

"We have been very conservative in our revised forecast," said Mr Hutchings. "The final profit will be determined by the insurance outcomes, but our fundamental positive outlook remains unaffected by the challenges created by the Oakside fire."