Debt row menaces apple industry

By PHILIPPA STEVENSON agricultural editor

The $600 million apple industry is on the brink of collapse over a $54 million debt dispute between growers and the major exporter, Enza.

Agriculture Minister Jim Sutton warned yesterday that many growers could go to the wall if forced to pay for botched foreign exchange contracts and a $4.2 million debt incurred for a now-defunct loading facility at the Port of Napier set up by Enza's predecessor, the Apple and Pear Marketing Board.

But the minister also warned that if Enza had to bear all the liabilities, it could cease exporting.

The industry accounts for more than 2 per cent of New Zealand's merchandise exports.

An increasing number of growers dispute that all the $54 million debt is theirs. Their representative group, Pipfruit Growers NZ, says legal advice suggests growers could be liable for as little as $8 million.

Nelson MP Nick Smith, who met growers in the main pipfruit regions of Nelson and Hawkes Bay over the past two days, has called for a formal inquiry into the foreign exchange losses.

In Hastings yesterday, he urged 200 angry growers to unite and take back control of the export business from corporate investors Guinness Peat Group and FR Partners.

The growers called for Enza chairman Tony Gibbs to answer a series of questions that they hoped would establish whether growers or Enza shareholders were responsible for the debts.

The growers demanded that Mr Gibbs reply by Friday, or resign.

Mr Gibbs also heads Guinness Peat, the Sir Ron Brierley investment company which, with FR Partners, bought 36 per cent of Enza last year. The balance is in the hands of mostly small growers.

Mr Gibbs said yesterday that the company did not believe its shareholders should bear any of the cost.

The losses on foreign exchange were a result of cover taken out in the early 1990s to protect growers' returns, he said.

That cover runs until next year.

Enza aims to charge the cost to growers before the pipfruit industry is deregulated on October 1.

Pipfruit Growers NZ chairman Phil Alison said Enza's suggestion that a significant body of growers supported the company "has been kicked for touch today."

"The corporates have come in and their management has been nothing short of outrageous. They have almost wrecked a perfectly good business."

Quick action was needed to save the industry, he said.

Last night, Mr Sutton said the industry was in crisis but it was too early for an inquiry into the foreign exchange losses while several other processes were underway.

These included suppliers invoking disputes clauses in their supply contracts with Enza, and an investigation by the regulatory Apple and Pear Board into Enza's foreign currency dealings.

He was also expecting advice from the Crown Law Office within days.

"It is very serious. Orchards that could be expected to be a hive of activity now are silent.

"A significant packhouse in Hawkes Bay has gone into receivership. I am very concerned."