The sharing of commercial information between independent apple exporters and Enza under the export permits regime has hurt overseas fruit sales, says permits committee chairman John Jenner.
In a report yesterday to Parliament's primary production select committee, Mr Jenner recounted the difficulties of the first year of the newprocess.
The regulations allow the permits committee to issue only permits that are complementary to Enza and do not adversely effect its reputation in the export market.
Mr Jenner said that required a flow of commercially sensitive information between Enza and the applicants which not only caused tension between the parties "but may on occasion also have adversely affected commercial relationships, both on and off shore."
"It seems to have been detrimental to sales of New Zealand fruit, from either the permit holder or Enza."
The complementary requirement also meant restricting business to the nominated distribution system, but that confined exporters and removed some of their negotiating power.
"This might not be good for the New Zealand industry," Mr Jenner said.
Another difficulty was that the regulations directed the permits committee to look at the effect on Enza of individual applications but did not deal with the cumulative effect in a given market.
"The regulations do not take into account the good of the industry as a whole. This has led to misunderstandings where, for example, an applicant for a permit shows that the growers concerned might get a better return, but where the business concerned is not judged to be complementary to Enza's. In such circumstances the regulations do not allow us to issue a permit.
"Similarly, a company may produce fruit to the specifications of a buyer overseas, but then cannot supply because we deem the volume to be such as to undermine Enza's current activities. In normal circumstances such a focus on the needs of the customer would be rewarded with good client relationships and increased business," he said.
Defining Enza's "current marketing activities" was also a difficulty.
Last season, the permits committee considered more than 120 applications from 20 applicants seeking approval for 8.3 million cartons. It approved 62 permits, for a total of 1.9 million cartons of fruit.
So far this season the committee had received 63 applications from 21 applicants for 8.2 million cartons. Thirty-four permits had been approved in principle, for a total of 2,451,000 cartons.
It had declined seven applications and approved 24 with reduced volumes. Twenty applications were in hand.
