Enza monopoly terminated

By KARYN SCHERER

A cheeky corporate raid on the company that controls most of New Zealand's apples and pears has prompted the Government to deregulate the entire $630 million industry.

After months of controversy and heavy lobbying by growers, the Government revealed yesterday that it would deregulate the industry from October, meaning the former Apple and Pear Marketing Board, now known as Enza, will lose its virtual monopoly on export sales.

It will be replaced by light-handed regulation from the Horticulture Export Authority, an export licensing and oversight body which has been used mostly for emerging export groups.

While the move appears contrary to its rubber-stamping of the dairy mega-merger and continued opposition to deregulation in the agricultural and horticultural sectors, the Government claims it is what most of the country's 1500 apple and pear growers want.

Most growers agreed yesterday, saying they were concerned the industry was on the verge of collapse after Guinness Peat Group and FR Partners took a $12 million bite out of Enza less than a year ago.

Nevertheless, the announcement caught most in the industry by surprise. A decision was not expected for several more weeks.

The move follows heavy lobbying by independent growers and only a recent change of heart by Pipfruit Growers New Zealand, the main body that represents growers.

Chairman Phil Alison described the move as a good compromise.

However, a group of Nelson growers claimed the "hasty and ill-considered" decision would lead to significant job losses in Hawkes Bay, Nelson, Gisborne and Central Otago.

GPG head and Enza chairman Tony Gibbs said from London last night his immediate concern was the potential impact on grower returns.

Last year, FR Partners claimed growers stood to lose $300 million a year in sales if the industry was deregulated too quickly.

Mr Gibbs said he still hoped Enza would be able to list on the stock exchange "in due course."

"It's a very hasty decision by [Agriculture Minister Jim Sutton]."

GPG and FR Partners were able to buy their 40 per cent stake in Enza after the previous Government introduced a new industry structure, which allowed them to lease orchards and buy shares.

The two companies have said they want to improve returns to shareholders by reducing costs, making the industry more efficient, and better managing foreign exchange.

Growers have been wary of their plans, believing their investment has been based on self-interest.

Merchant bank Grant Samuel last year suggested Enza's unlisted shares were worth three to four times the $1.65 per share the partners paid. Months of bitter squabbling over the direction of the industry have seen the shares plummet to between 55c and 60c.

Long-time Enza critic and independent-growers spokesman Rex Graham predicted about four or five competitors to Enza would emerge.

"The industry in its current state is running at a huge loss.

"It's a matter of whether we can turn it into a profitable industry and we can't do that by having to supply a state monopoly."

The Pipfruit Exporters Committee also described the decision as a "giant step forward."

Enza controls about half of all apples sent from the Southern Hemisphere to Asia each year, around a third of those sent to Europe, and about 40 per cent of those sent to North America.