Enza tries new tack on losses

By PHILIPPA STEVENSON

Pipfruit exporter Enza may try to claw back its controversial $50 million of foreign exchange losses from past suppliers if it is blocked from deducting the costs from today's suppliers.

Enza chairman Tony Gibbs told Radio NZ yesterday that the company was considering putting last year's supply contracts into an arbitration process which is already refereeing a dispute over this year's contracts.

Growers representing about a third of the country's apple production invoked the disputes clause in their contracts to challenge Enza's right to deduct costs that were not incurred from the sale of this year's fruit.

Yesterday, Enza refused to comment on the reasons for seeking retrospective arbitration on last year's contracts.

But the move is believed to be motivated by a provisional finding of the watchdog Apple and Pear Board that the company's predecessor had breached regulations by spreading its losses forward until next year.

Other opinion, including that of the Crown Law Office, has suggested that a forecast $19 million loss for next year should not be deducted from suppliers' returns this year.

Industry sources yesterday said Enza was now proposing that if the losses should not have been spread forward, then they should all have been covered by last year's suppliers.

Growers are concerned the company will try to recover the entire $50 million from last year's suppliers.

Pipfruit Growers NZ chairman Phil Alison emerged from a first day of negotiations with Enza on the dispute to describe the company's latest proposal as a "hideous step".

He said the talks with managing director Michael Dossor and other Enza executives had not progressed "in leaps and bounds", but had been held in a good spirit.

Enza spokesman John Walsh said it had been a positive meeting from which both parties were keen to get a speedy negotiated solution.

Another meeting was scheduled for Monday. "And if it is not resolved then, they will continue to meet until it is," Mr Walsh said.

Enza is also due to make a submission on the Apple and Pear Board draft ruling by 5 pm on Monday after being granted an extension to last Wednesday's deadline.

Acting Agriculture Minister Michael Cullen welcomed negotiations between the two groups.

Dr Cullen said Prime Minister Helen Clark and Agriculture Minister Jim Sutton thought a negotiated solution was best for the industry.

The Government's preference was for Enza to stop deducting next year's foreign exchange costs, for growers to accept this year's costs being taken from this year's return, and for the two to square their accounts after arbitration and other judicial processes were completed.

The Government would not bail out the industry.