Bite on apple grower

By LIBBY MIDDLEBROOK

Andy Wilson only has a few days left to stroll beneath the fruit trees his grandfather planted more than 50 years ago.

The Hawkes Bay orchardist is about to walk away from his family heritage, job and the place of his childhood upbringing because he cannot afford to grow apples any more.

Bad weather and poor returns have elbowed Mr Wilson out of orcharding and before long he will travel down the Hastings road named after his grandfather for the last time as a fruit grower, with a truck load of furniture and debt.

"We did everything we could to hold on. It wasn't because we were poor orchardists ... it was totally out of our control."

Mr Wilson, who is moving to America with his family, is not the only Hawkes Bay pipfruit grower facing this predicament. During the past decade Mother Nature has been particularly unkind to the Fruitbowl of New Zealand.

Hail has clobbered the region three times since 1994, obliterating crops and leaving behind costly insurance bills.

A large bite of the region's apple crop wound up in a juicing machine two years ago because of sunburn and poor growth rates caused by the freak El Nino weather pattern.

The rot set in a little further this year when the global apple market bottomed out partly because of an oversupply of fruit and a drop in apple consumption.

Within four months the predicted carton returns for New Zealand braeburn apples - of which 50 per cent are grown in Hawke's Bay - halved from $14 to $7 a carton.

Not even the most proficient orchardist can run a business on dismal returns like that. Many of the region's 850 growers are clinging on to their properties by a spider thread.

While growers in areas like Nelson have been knocked back by poor returns as well, a wider range of apple varieties and less inclement weather conditions saved them from the worst.

Third-generation Hawkes Bay families are walking off their orchard blocks and some are selling 40 per cent below Government valuation.

European cars have been traded in, holiday homes put on the market and children removed from private schools. Retailers have lost business due to shrinking incomes.

Brown grass creeps along at the farm gate and by derelict corrugated iron packhouses. Disease spreads through some orchards starved of sprays and fertilisers.

It is a totally different picture from the late 1980s when privileged Hawkes Bay families zipped across to Europe for a summer holiday.

"We're all running out of money, we're going broke and we're all fighting for survival," says Rex Graham, orchardist and founder of the Hawkes Bay Independent Pipfruit Growers Association, an anti-producer board group.

"Ten years ago we had baches, boats, new cars, overseas trips and our kids went to private schools. These days it's essentially a peasant industry."

Even the country's largest privately owned growing operation - Trust Fruit - has struggled to withstand the perpetual bruising of the Hawkes Bay apple market.

Company director Kevin Hope, a third generation Hawkes Bay orchardist, says returns for stonefruit, which accounts for 50 per cent of the Trust Fruit crop, rescued the company from slipping into a cauldron of debt.

"We're in survival mode, if we didn't have the stonefruit we'd be in dire straights."

Mr Hope says the company's joint venture with Crasborn & Sons, another large Hawkes Bay orcharding operation, has also been instrumental in the company's survival.

Trust Fruit and Crasborn & Sons, which once competed against each other from opposite sides of a Twyford road, merged their marketing operations four years ago to cut costs and boost the profiles of their combined orchards.

Their Opey brand is now marketed throughout New Zealand and 10 per cent of stonefruit production is exported. Since 1995 the joint venture's grower base has increased from two to 110 with turnover of $10 million in the 1998-99 year.

"We're trying to survive. Instead of fighting each other we're pooling our resources; instead of two packhouses we have just one. Opey's given us more clout in the market with one brand and we have more control over our product."

Opey also plans to apply for a licence to export apples and pears directly under new legislation allowing companies to bypass the Apple and Pear Board through an independent committee.

It is a tremendous progression from the days when growers dispatched their fruit to the board in a wooden bin.

Meanwhile, the decay has firmly set itself into the bank balances of hundreds of other smaller orchardists and the board is getting much of the blame.

Average apple carton returns to growers for the 1999 year, which will be announced next week, are expected to fall just under $11 - more than $3.30 down on the previous year.

It is estimated that the fall in apple returns has sucked more than $25 million out of the Hawkes Bay economy.

With about 100 supporters, the Independent Pipfruit Growers Association argues that the single seller status of the board is responsible for the abysmal state of the Hawkes Bay orcharding industry.

The board's marketing and export arm, Enza, which had turnover of $724 million in 1998, has been the only organisation allowed to export apples and pears by law. Without doubt, the 1999 season has been the worst in 20 years.

Enza had not anticipated the robust competition which emerged in traditional export markets like Europe. Huge volumes of apples varieties previously unique to New Zealand were already in the market place when New Zealand apples arrived, forcing Enza to undercut prices to off load fruit.

Earlier in the season Enza also opted to accept from growers an increased volume of braeburn apples outside the preferred sizing range, affecting returns. Braeburn makes up about 40 per cent of the national apple crop.

Association member and Hawkes Bay orchardist Van Howard says Enza's lack of strategic planning and foresight have cost orchardists. Enza's sale results have pushed down the revenue of an average 8ha Hawkes Bay orchard by $45,000 from last year.

Mr Howard reckons more than 100 local orchardists are likely to exit the industry during the next 12 months.

The association believes deregulation would create more competition, forcing Enza to improve its performance.

"Enza's made some bad decisions and we're really hurting because of it. We've got good land and a port that's close, but we're being strangled by a single desk that has not gone into the market wide enough."

The pipfruit sector of the Hawkes Bay Fruitgrowers Association is still prepared to support the board and Enza. Sector president Steward Horn says the group, which represents most Hawkes Bay growers, agrees the board needs to improve its performance but wants to retain its single-seller status.

"It's an accumulative thing. The region has been debilitated by these confined weather events and the reality is no one in the world was going to make any money with the market the way it was. Enza needs to do better, but we need a united front overseas."

Board chairman and acting chief executive John McCliskie is relatively up front about the organisation's performance. He concedes Enza needs to do a lot better. All staff have been told to reapply for their jobs. Board chief executive Gary Smith has resigned.

Mr McCliskie says the market looked "pretty robust" when Enza forecast returns to growers, but between March and July the market collapsed. In hindsight, Enza would have juiced more fruit rather than exporting large volumes of braeburn.

"Everyone agreed at the time it was the right thing to do, but you can't guarantee anything. This is an extremely risky businesses."

Key to improving returns to growers is Enza's restructuring plan that will be put to a grower vote before March, says Mr McCliskie.

The board will retain its statutory export monopoly but plans to deregulate onshore activities. That means growers will be responsible for organising transportation of their fruit from orchard to port.

Growers will also be issued tradable shares and Enza will no longer be obliged to take all fruit.

"People are implying that it the export monopoly hasn't worked, but it has. In Hawkes Bay the pain to growers is more acute and I understand that they're grumpy. The signals for next year are good. I'm optimistic."

In the meantime, Hastings National Bank rural manager Dick Kingston says pipfruit growers are consolidating their operations to cut costs.

The bank, which represents about 200 growers, is also nudging its clients to sell off-farm assets. With about 50 properties for sale, the last thing banks want is a real estate market laden with orchards.

"It's not in the interests of the bank or the client base."