Hawke’s Bay growers mull McCain takeover bid

Source: Radio New Zealand

A group of Hawke’s Bay growers is looking at whether it could take over the McCain vegetable processing factory and save the industry.

McCain is closing its frozen vegetable factory in Hastings, a decision that’s impacting more than 100 growers of peas, beans, corn and carrots.

The international company said it had reviewed operations at the site and ‘considered a range of options to strengthen the long-term position of the site’.

However, it said the business was ‘unable to identify a sustainable pathway under the current model’.

The decision is a huge blow to the industry in Hawke’s Bay, where the impact is being felt widely from growers to contractors, and mechanics to factory workers.

Alistair Setter has been farming in Central Hawke’s Bay for decades, and told RNZ the closure has come as a shock, and with no warning.

“I was like, oh gosh…have we really grown our last crop of peas? My father grew peas back in the 70s and it’s an important business for us but it’s also an emotional thing as well.

“It’s a great thing to be part of that pea growing business – you think you’re doing good for the world and everything else. As the days go by it kinda sinks in and it really feels like a loss on quite a few levels,” Setter said.

He owns 180 hectares near Ongaonga, growing crops over the warmer months and grazing cattle in winter. About a quarter of his income is from supplying peas to McCains – so the financial hit is substantial.

“It will be significant and we will have to think of alternatives… but they won’t pay as much and it will put risks on other cropping programmes… so yeah we’ve got challenges,” he said.

“There are wider issues at play here about how we handle food security as a nation.. when the industry’s go they’re very hard to get back,” Setter said.

One of the alternatives could be a group of growers taking over the current McCain’s factory site, and processing their crops themselves.

Since the closure was announced several meetings have been held between ministers, mayors, and growers to see if anything can be done to save the industry in Hawke’s Bay.

Setter said there were a lot of people keen to see the pea, bean and corn cropping industry survive.

“There’s a lot of desire among farmers like myself and other industry participants to have a go at trying to save it.

“It’s a big thing to try and organise, and it’s a big business, but there is a lot of will out there. The farmers we know around here, a lot of them are really capable business people so sometimes when there is a will and a need… maybe there is a way,” Setter said.

One of those farmers is Hugh Ritchie. He’s been growing peas for McCain for over 30 years and said for it to work, there must be more scrutiny of the food production chain. He said to understand why big companies like McCain can’t make it work, everyone’s margins, from growers to supermarkets, must be analysed.

“If we don’t solve this problem and really understand why it’s happening then it’s just going to be the start of a downward spiral on the domestic production of food,” said Ritchie.

Central Hawke’s Bay mayor Will Foley is also keen to find out the cause of McCain decision.

“It doesn’t seem right that we can’t produce that food and sell it locally and for export – all at a success. That’s why we want to get to the bottom of what is going on here and can we take it on ourselves,” he said.

However, the pressure is on because McCain is only using its Hastings factory until January; after that the machinery could be packed up and sent overseas.

“There is a lot of urgency because any businesses involved that are thinking there is no more business going forward, they are needing to dispose of their assets, otherwise it’s just a cost to them..

“And if we lose those assets and have to start again, the cost to start up will be so much more than if we can take over what is already there,” Foley said.

The Minister for Agriculture, Todd McClay, said he had a constructive and informative meeting with the region’s mayors last week.

“There is a huge amount of optimism in the region and the Minister is looking to meet with growers over the coming weeks,” he said.

McCain told RNZ it has received ‘potential interest in the plant and its equipment from several parties and is continuing discussions’.

‘Massive’ flow-on effect

Many growers, especially for crops like peas, beans and sweet corn, would normally get a contract in mid-year and then start planting crops through August and September.

The impact of McCain closing is rippling through the region, from growers to factory workers, to companies selling seeds and chemicals, contractors and machinery engineers.

Fogarty Spraying in Ongaonga sprays about 1500 hectares of McCain crops each season, and employs three people to help run the operation.

Owner Stuart Davies told RNZ that with McCain’s shutting up shop he’s looking at scaling down by cutting one worker and possibly selling one of his spraying machines.

He said while others were much harder hit than him, this was the kind of impact that was being felt widely in the region.

“That whole economical side of it. It’s all singing and dancing until all of a sudden the big red button’s been hit and that’s it – she’s all stopped. It has a massive flow-on effect,” he said.

Davies said luckily there was currently a lot of confidence in other farming sectors like red meat and dairy, but it would still be a tough time for growers.

The news came out of the blue for most, and Davies said McCain could have done a better job at communicating its closure, as there was no notice that it was even being considered.

“We didn’t quite expect the rug to be pulled just like that, it would’ve been nice to have some warning.

“That was the feel around the place – that the rug was pulled pretty abruptly rather than maybe a softly softly ‘hey guys this is happening in 18 months’,” he said.

McCain declined RNZ’s request for an interview, saying in a statement the business informed key stakeholders of the closure on the same day as its Hastings team was told.

“We indicated to our stakeholders that we are available to answer any questions about the closure and are also available to discuss the impact the closure may have on them.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand