Apple growers biting back in Enza dispute

By PHILIPPA STEVENSON agricultural editor

Apple growers are lining up to invoke a disputes clause in their supply contracts with Enza as relations with the big pipfruit exporter reach a new low.

Hawkes Bay grower Jonathan Wiltshire is one of four orchardists challenging the decision by corporate investor-dominated Enza to make $4.50 a carton deductions from growers' fruit returns.

The company, controlled by investor firms Guinness Peat Group and FR Partners, is taking the money to cover what it terms "legacy costs" of the corporate Enza's forerunner, the Apple and Pear Marketing Board.

The costs total $54.2 million and relate to foreign exchange losses and the defunct Omniport loading system at the Port of Napier.

Growers, some of whom claim that the additional costs will force them out of business, want Enza to suspend the deductions until after the results of a national poll on how the debt should be paid.

Other growers are understood to be also preparing to challenge the marketer by invoking disputes clauses in their supply contracts.

Debate rages over the level of the costs, how quickly they should be recovered and whether that should be from all growers, this year's Enza's suppliers, the company's shareholders or a combination of the different groups.

Growers are mystified by the new level of debt.

They thought that the historic foreign exchange and Omniport losses, listed in last year's Enza annual report as totalling $25 million, had been wiped by a $25 million payment from the profit of Enza's former company, Frucor.

They also point to a report on Enza by merchant bankers Grant Samuel which listed foreign exchange losses at $10.2 million.

Despite Enza terming them legacy or historic costs, Mr Wiltshire said some of the debt was not historic.

"Some of the losses are in fact from 2002, which they have chosen to bring forward to this year," Mr Wiltshire said.

His group had challenged Enza's right to deduct losses from growers that were not incurred from the sale of fruit.

Pipfruit Growers NZ chairman Phil Alison said his organisation had its own forex expert looking over documents supplied by Enza, and would report its findings on the debts to growers within 10 days.

Mr Alison was "pleading with Enza to negotiate" with growers.

Grower meetings are planned for Nelson tonight, and Hastings tomorrow.

The growers' options were likely to become clearer after these meetings.

Mr Wiltshire said if his group could not resolve its dispute with Enza, it would take the exporter to arbitration, as allowed under the supply contracts.

Meanwhile, the bill which will fully deregulate the pipfruit industry - the Apple and Pear Industry Restructuring Act Repeal Bill - has been sent to the parliamentary primary production select committee, which is expected to report back by September 6.

Agriculture Minister Jim Sutton wants the legislation passed in time for the next pipfruit season, which starts on October 1.

Nelson MP Nick Smith had proposed amendments to the bill which, he said, would protect growers from paying Enza's $54 million debt.

That move angered Enza chairman Tony Gibbs, head of Guinness Peat Group.

He criticised Mr Smith for "the worst kind of socialism," having no understanding of the issue and being out of touch with his constituents.

Mr Gibbs said a large number of Nelson growers accepted the debt as grower costs and supported it being spread among exporters over several years

"I'm hopeful that common sense will prevail and a solution will be reached in a timely manner."