Enza fight on verge of settlement

By PHILIPPA STEVENSON agricultural editor

Enza will pay around $12 million to apple growers next week in the hope it will buy an end to the pipfruit industry's bitter foreign-exchange dispute.

The payment, likely to be in the hands of around a thousand growers by next Thursday, is part of a conditional settlement announced yesterday by the major apple exporter and suppliers' representative Pipfruit Growers NZ.

The boost to growers' flagging income is a refund of deductions from their fruit returns that Enza had taken to cover a $51 million debt arising from botched foreign-exchange transactions. They included $21.1 million not due to come to book until next year.

The company boosted deductions to $4.50 a carton from growers' receipts in May - up from the $2.85 growers had budgeted for - after the Government announced it would deregulate the industry from October 1.

In the agreement thrashed out with Pipfruit Growers in recent weeks Enza has agreed to meet all costs related to the 2002 foreign-exchange contracts providing growers cover forex costs of $30.3 million this year, as well as a $4.2 million debt from the defunct Napier loading facility, Omniport.

The deal is conditional on a majority of growers accepting the offer, Enza getting bank financing to cover the $21.1 million debt and the company facing no further costs from the investigation into its forex dealings by the watchdog Apple and Pear Board.

Yesterday, Enza managing director Michael Dossor said the immediate refund did not pre-empt a final settlement. All it meant was that the growers would immediately get the relief they had been asking for.



Should the agreement not go ahead, Enza would seek the money back.

The company was confident it would have bank-finance arrangements in place by the end of next month.

Pipfruit Growers chairman Phil Alison denied that the immediate payment was a sweetener to get growers to accept the settlement. His group had wanted to provide growers with financial relief and Enza had wanted to show its commitment to a deal.

The offer would meet many growers' expectations, he said.

But a key group, who produce about half the apple exports and who are involved in arbitration with Enza, will not be withdrawing their action.

A spokesman said the group had discussed the settlement but made no decision.



Mr Alison said settlement was not contingent on the group's withdrawing their action but they would probably seek to postpone it while the other conditions were worked through.

Settlement would mean a huge amount to the industry, he said. The row had threatened its viability.



Mr Dossor refused to be drawn on whether Enza's move constituted a backdown. The company had been adamant that the forex debt was a grower liability.



Enza had been seriously concerned the issue would damage its ability to attract a supply of next season's apples. The company now hoped to be measured on performance.

He expected to know in the next fortnight whether a majority of growers would accept the settlement. The offer could go unconditional as soon as funding was confirmed by Enza's bankers.

Meanwhile, the Apple and Pear Board yesterday released its final determination on foreign-exchange transactions undertaken by Enza's predecessor, the Apple and Pear Marketing Board.

The board unanimously concluded that transactions in February last year did breach regulations, and in a two-to-one majority decision also found that transactions last June went beyond that necessary to hedge currency risks in exporting apples and pears.

It did not stipulate a remedy for the breaches but invited submissions by 5 pm next Tuesday on what action should be taken.