Treasury theories worry Apple and Pear Board

Press, 16 December 1985, Page 22

Treasury theories worry Apple and Pear Board

By

OLIVER RIDDELL

in Wellington It is nonsense for the Government to try to force traders internationally to compete with one another, according to the Apple and Pear Board. Its chief executive, Mr Joe Pope, said the board agreed with the Government’s wish to have a freemarket economy, but it did not support transposing this concept into international marketing. “We have some fears that the Treasury will get its way and the Government will go too far,” he said. The board’s chairman, Mr Ken Kiddle, said the record of the board as a trader spoke for itself but it had some fears because theory seemed to be overwhelming practical common sense. “If it isn’t broken then don’t fix it, but even our success in marketing overseas may not protect us from all this theory from people who have never sold ah apple in their lives,” he said. “Some Government advisers are of real concern to us.” Mr Pope said inflation and costs were the main practical worry for the board. The high exchange rate meant the board would not make as big a profit next year as it had this, but was still less worrying than inflation. If the exchange rate stayed high then the trading surplus would be down, but the board was not all that keen to see it fall as that would put up costs and resume the inflation spiral. He said inflation was still the chief worry because no trader could pull an extra 16 per cent out of the marketplace each year just to keep up with inflation. In its annual report for the year ending September 30, the tonnage of apples and pears rose 12.4 per cent on the previous year — from 241,000 to 271,000

tonnes. Total payments to growers rose 22.5 per cent, from $69 million to $84.5 million, while the average payment a tray/carton rose 9.1 per cent from $5.29 to $5.77. Gross sales of exported fresh fruit rose 37.5 per cent from SI6SM to $227M and of local fresh fruit 9.4 per cent from S32M to S3SM. Gross sales of processed foods rose 19 per cent from S47M to SS6M.

This meant that total gross sales rose 30.3 per cent from $244M to S3IBM. Mr Pope said the 20 per cent devaluation had been of considerable help in securing this result, although perhaps not as much as in the previous year.

The trading surplus distributed to growers was up from 513.2 M to $15.3M, but retained earnings were down from $13.6M to SB.9M. However, the price stabilisation account rose from $19.07M to $24.04M. Several new Just Juice and Fresh-Up products are being launched by the board, including new apple mixtures such as applecherry, apple-raspberry and apple-nectarine. The board plans to take these products round the Pacific rim, and has begun with the Australian state of Queensland and New South Wales. . “We think there is a potential trade worth ?50M to us in the Australian supermarkets,” Mr Pope

said. “We are aiming at the top slot on the juices market, and have penetrated every supermarket in New South Wales.” New Zealand was benefiting from having a single marketer responsible for product and quality. During the 1970 s Australia had been the world’s biggest supplier of pipfruit products but, since deregulation there, it had slipped to fifth and now had 167 exporters, compared with New Zealand’s one. The New Zealand industry was going to double in the next five years in a world already hopelessly oversupplied with the product, he said. But the board was very confident of its future in competition with

other countries because it was a single-seller. Competition meant one buyer played off several sellers against one another, it was a fallacy that competition was efficient, but a fallacy shared by many New Zealand industries. Mr Kiddle said he was delighted with the progress being made to set up an offshore borrowing facility. There had been an extremely good response from the international banks, which showed their confidence in the future of the industry. The board was arranging a borrowing facility of SUSI2SM, to be drawn as required. It was very flexible, but would cost the board S7M a year to service, which meant it had to do better or growers would be S7M out of pocket. “Obviously it is more expensive than the 1 per cent arrangement we had with the Reserve Bank, but we are encouraged by the progress being made,” Mr Kiddle said.