Penalty ruling crucial to growers' cash

By PHILIPPA STEVENSON agricultural editor

Any decision by the watchdog Apple and Pear Board to impose harsh penalties on Enza over rash foreign exchange management will play a key part in the industry's debilitating row.

Yesterday, Enza spokesman John Walsh said the company had been on the verge of halting $19 million worth of deductions from growers fruit returns last Thursday.

The fly in the ointment designed to soothe the dispute between the company and its suppliers over liability for a $50 million foreign exchange debt had been the regulatory board's provisional finding on Enza's forerunner, the Apple and Pear Marketing Board.

In Wednesday's draft decision, the watchdog suggested that the marketing board had breached regulations by exposing growers to severe losses in several options contracts in February last year.

If the finding stands after submissions from Enza and others due today, the board could impose a range of hefty penalties on Enza, the marketing board's successor.

Mr Walsh said Enza had decided it could not afford to stop deducting the losses from growers while an unknown penalty hung over it.

"The board felt it had no choice but to maintain the status quo in terms of deductions at least until the final Apple and Pear Board decision was out."

But the situation could change quickly, he said.

"If we get an appropriate negotiated solution and the Apple and Pear board decision allows, then we can reverse deductions in very short order."

Pipfruit Growers NZ chairman Phil Alison said he found Enza's suggestion "bizarre" as it knew the board was conducting its investigation.

In Parliament yesterday, Agriculture Minister Jim Sutton said the commonsense approach to settling the dispute was for Enza to stop deducting the forecast $19 million losses for next year, and for growers to pay this year's losses "in the meantime".

Responsibility for the debt could be "squared up" at the conclusion of negotiations and arbitration already under way, he said.

Mr Walsh said Mr Sutton's idea was solid but for the spectre of the penalty.

Mr Alison said growers were not in a position to accept 2001 losses because acceptance raised issues of liability, and because they were unaware of the extent of the losses so did not sign contracts in a fair environment.

The industry's impending deregulation in October added further uncertainty, he said.

Mr Sutton said in Parliament that the Crown was likely to assume responsibility for any outstanding matters being addressed by Enza after it was disestablished.

Mr Alison said that if the Government could not get the parties to the table, it should look at statutory management of Enza.