Enza bite goes on small growers

BY PHILIPPA STEVENSON agricultural editor

Enza's new supply regime is likely to force more small growers out of the industry and leave the rest with greater responsibility for their fruit after it reaches the market.

The company - controlled by investment firms Guinness Peat and FR Partners - said yesterday that it expected the nation's 1500 pipfruit growers to join around 25 supply groups under arrangements that were "a key to orderly and effective marketing."

But operations general manager Clive Gerrand said Enza could not guarantee all growers would be able to join a group, effectively forcing some out of business.

Poor returns have already brought about the demise of orchards throughout the country, and Pipfruit Growers chairman Phil Alison said more could go as a result of the new supply structure.

Some might not find a group to take them, and others could become uneconomic as they tried to meet supply terms and conditions, he said.

That was a consequence of the company shifting from a cooperative to a hard-nosed commercial approach - a result of the "idiotic regulations we bought into," said Mr Alison.

Enza, the former Apple and Pear Marketing Board, was re-regulated from April 1 into a grower-owned company, after growers' requests for a co-operative were dismissed by the previous Government. The new rules allowed Guinness Peat and FR to qualify as growers and buy nearly 40 per cent of Enza's shares.

Mr Alison said there were now "terrible frictions" between supply and shareholding.

Mr Gerrand said the company expected the new supply arrangements to deliver the best value for the pipfruit industry on a per carton and per hectare basis.

But growers spoken to by the Business Herald said they feared that Enza's specifications for the fruit it required would leave them without a buyer for up to two-thirds of their crop.

Chief executive David Geor said that in the past the company had marketed fruit for which there was no real demand. That had dragged down prices for other products.

"We can't afford to keep doing that. This is not about limiting supply. It's about understanding our markets, controlling supply, responding to and creating demand situations that give you the ability to reap the greatest rewards given prevailing market conditions."

Independent Pipfruit Growers spokesman Van Howard, who has urged immediate deregulation of the industry, said if Enza could not take all the fruit produced, it should let in other exporters.

Enza fought this year's export permits process, which allowed other exporters to market fruit, and Mr Geor said the company would again vigorously pursue the regime.

He did not fear competition, only grower returns being "dashed by a multiplicity of less-than-aligned sellers in the market."

Growers were likely to make savings of around 5 per cent from new streamlined supply operations. Enza's savings had yet to be established, Mr Geor said.

Under the new structure, growers will sign contracts with Enza, which will also have deals with supply groups for packaging, storage and on-time delivery of the product to the wharf.

The groups will be responsible for ensuring that fruit varieties with storage problems are shipped at the best time and for all aspects of fruit quality for 10 days after the fruit has arrived overseas.

The groups will incur penalties equal to the cost of addressing any problems if fruit fails inspections.

Mr Alison said his organisation was discussing details of the supply arrangements with Enza.

"We want Enza to be as responsible as it possibly can ... We are trying to come to common ground."