SCF's apple company ripe for overseas picking

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Turners and Growers says it is not interested in buying South Canterbury Finance's apple business.

South Canterbury Finance owns 79.7 per cent of Scales Corporation, one of New Zealand's largest apple producers, through its subsidiary Mr Apple New Zealand.

The firm, which has 17 orchards in the Hawkes Bay and grows more than two million cartons of apples each year, is expected to be sold as part of South Canterbury's receivership.

But Turners and Growers chairman Tony Gibbs said: "We are not interested in being a commodity apple grower."

While Turners had joint ventures with other growers it was more interested in exporting than growing apples, Gibbs said.

Being an apple grower had been tough in the past few years because American prices had been depressed.

One industry source said the Scales business was unlikely to be sold as a whole in New Zealand because some of the orchards were not well-positioned.

It was likely to be either be broken up or sold to an overseas buyer. Asian buyers were keen to snap up food producing sources, the source said.

Earlier in the week, Scales Corporation said it was not part of the receivership of South Canterbury Finance and would not be affected by it.

"Scales Corporation operates autonomously from the activities of its majority shareholder, South Canterbury Finance, and its day to day operations will not be affected by the receivership," the company said.

Scales Corporation recorded an unaudited $10.10 million pre-tax operating profit for the year ending June 30, 2010.

Chief executive Andy Borland said the company was forecasting a continuation of profitable trading from its subsidiaries.

Meanwhile, Prime Minister John Key said yesterday he remains confident the Government will recover much of the $1.7 billion in taxpayer money paid out when South Canterbury Finance was put into receivership.

Last week, the Government paid out $1.6 billion to South Canterbury's investors under the retail deposit guarantee scheme and gave a loan to the receivers. The Government has said it expects to recover about $1 billion of that.

Key said yesterday $1.7 billion was a "deceiving number".

Treasury estimated the total cost at $800 million and the revenue earned by the scheme also had to be taken into account, he told TVNZ's Q&A.

Reserve Bank Governor Alan Bollard said the retail deposit guarantee scheme was necessary.

"In a nasty crisis of that sort, you haven't got much room to move and when you do move you have to move very quickly and so, looking back, I don't think we could really have done anything differently."

He said he was reluctant to establish the scheme but not doing so would be worse than the distortions and adverse incentives such a scheme creates.

New Zealand had to do something when Australia announced it was putting in place a guarantee, he said.

"But we did stop a bank crisis and we did stop a financial sector crisis, so ultimately that was a successful scheme."

- additional reporting NZPA