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Enzafruit Welcomes Select Committee Review

Release Enzafruit

ENZAFRUIT Ltd today welcomed the decision by Parliament’s Primary Production Select Committee to review its recent initiatives to actively manage the Braeburn crop.

Chief Executive David Geor said the review gave ENZAFRUIT the opportunity to explain the “absolute commercial logic, and market reality” behind the initiatives.

“There has been a lot of rhetoric from some of ENZAFRUIT’s detractors about the measures. What they need to recognise is that if ENZAFRUIT did not take this action and dumped what is going to be a record Braeburn crop on international markets, the returns we could deliver for growers would be disastrous.

“Nobody wants to juice quality fruit. But we are dealing with a fragile market and the simple economics of supply and demand. We have made prudent commercial decisions to protect and maximise returns for our growers.

“What’s more, we are not forcing growers to submit fruit for processing. But the fact we can provide this solution is testament to the integrated nature of our business.”

Mr Geor also stressed that the measures were developed in consultation with PGNZI, the organisation representing New Zealand’s apple growers.

Ends


BRAEBURN CROP MANAGEMENT BACKGROUND


 At the start of the 2000 season ENZAFRUIT was forecasting Braeburn sales of 6.2 million cartons from a gross export crop of 6.5 million cartons. At that level it was anticipated average FAS returns to growers would be $14.24 a carton.

 Subsequent increases in the forecast volumes of available export-quality Braeburn has since necessitated a review of market planning activity. Market analysis indicates that the size of the export crop available is such that if it is all sold on international markets, prices would be pushed down to a level uneconomic for growers – that is they would make a loss.

 As an example, ENZAFRUIT’s analysis suggests that an additional sales volume of some 600-700,000 cartons, which equates to a gross export crop 2.5% larger than the current forecast, will result in FAS returns dropping by $3.70 per carton to $10.55.

 On 24 March, ENZAFRUIT announced its decision to actively manage this season’s Braeburn crop based on its market analysis.

 ENZAFRUIT’s proposal was that growers be given the opportunity to submit part, or all, of their export crop for processing by its subsidiary, ENZAFOODS. They would be paid 16 cents a kilo for this (equivalent to $2.88 cents per tray).

 That would provide the opportunity to reduce the pool of fruit available for export to a level that could sustain economic returns.

 As a result of the voluntary proposal, some 650,000 cartons of fruit will be processed. With the current gross export crop predicted to be 7.8 million cartons, this level of volume management will maintain a viable sales plan and assist in protecting returns.

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