Ginkgo growers left out of pocket
Angry Nelson ginkgo growers are hundreds of thousands of dollars out of pocket after the collapse of the company set up to develop the fledgling industry.
The failure of Nature Green NZ, which was placed in voluntary liquidation earlier this month, has sparked bitter recriminations and threats of legal action between its founder and sole director, John Knight, and disgruntled growers who still haven't been paid for some of their 2011 crop and all of their 2012 crop.
Several have been left with sizeable loans which they are struggling to service. Some growers have hired a Nelson lawyer in a bid to force Nature Green to return their leaf, to prevent it being sold by the liquidator to pay off the company's debts. However, Knight says the crop belongs to the liquidator.
These growers are also investigating launching their own venture in an effort to keep the industry afloat. Others are still pinning their hopes on Knight - who spent 15 years researching and trialling the crop in New Zealand and has written a comprehensive manual for growers - starting afresh with another company.
Since Nature Green was launched in 2005, about 1 million ginkgo biloba trees have been planted by more than 30 growers in the top of the South Island, Hawke's Bay, Bay of Plenty and Waikato, with half of these in Nelson.
As the sole commercial producer, Nature Green contracted Appletons nursery near Wakefield to supply trees it sold to growers. In return, it pledged to buy their harvested leaf to dry, process and sell. Ginkgo is grown for its medicinal properties and is especially popular in China.
However, growers claim that Knight kept reneging on the price he promised to pay them, which started at $15 per kilogram of dried leaf but had fallen to $8 by January this year. The final straw came when he said he could pay only $5 per kg for this year's harvest, prompting 13 growers representing 60 per cent of the crop to reject his offer and seek legal advice.
In an email to growers, Knight blamed them for forcing Nature Green into liquidation, saying he could only afford to pay $5 per kg after selling leaf in Europe for less than this and receiving a much smaller than anticipated order from China for the packaged product.
He claimed the $5 deal would have covered growers' costs and was "better than nothing".
But try telling that to growers like Neville and Lorraine Bunn, who planted 20,000 trees on their Lower Moutere farm on the strength of Knight's optimistic forecasts, only to find themselves in debt and wondering if they will be able to keep their property.
"What really pissed us off is we spent our last $15,000 doing up our dam because John Knight guaranteed us $8 per kg last year," Bunn said.
"We got out of orcharding because it wasn't making any money, and thought ginkgo will take up that, but now I'm out working for other people."
He estimates they are owed about $17,000 for this year's crop, but as an unsecured creditor at the back of the queue, he doesn't expect to see any of the money.
"He's blaming growers, but we did what he wanted. We grew good leaf, and the cock-up was that he couldn't sell it."
Doug Pook has been hit doubly hard. Not only is the Riwaka grower owed about $80,000 for his leaf, he is still to be paid $40,000 by other growers for harvesting their crops.
"Because they haven't been paid, it's been hard getting money out of them."
One of the first to grow ginkgo in the region, Pook spent about $500,000 converting a grape harvester to pick ginkgo.
He said he felt badly let down by Knight, who had assured him in January that everything was fine.
"We've gone to a lot of expense and there's been nothing at the end.
"I'm quite cross with him. It's a big mess."
Pook said he was concerned that Knight would try to continue to operate through another company.
"People should be aware of this before they start spending money on trees."
All was not lost, he said, as he already had a buyer lined up for his 2013 crop, although at a lower price than Knight had promised, and he was aware that others were talking about forming a co-operative to carry on.
Another who has invested heavily in ginkgo is Denis Chambers, who said he had spent more than $120,000 on planting 34,000 trees last spring, irrigation and a special tractor.
Chambers, who has yet to harvest, said he was "pretty disappointed" that Knight had given no indication there were problems, as it was a "lot of money to chuck away".
However, he was hopeful growers could get a co-operative up and running.
Dave Fenwick, who has 28,000 trees in Redwood Rd, said many growers had lost confidence in Knight when they realised "it wasn't as sound a prospect as he made out".
He agreed that at $5 per kg, growers would have covered their costs, but said most were fed up with Knight lowering the price in breach of their contracts.
Fenwick said he still believed there was a good market for ginkgo because New Zealand grew high-quality, chemical-free leaf, and he was contemplating joining the group of Nelson and Hawke's Bay growers looking at starting their own venture.
A leader of that group, Redwood Valley grower John Fitzgerald, refused to comment, other than to say growers believed the industry still had "legs".
Robert Appleton said his nursery was owed a substantial sum by Nature Green and still held unsold stocks of trees and seed.
"We have been heavily exposed. We kept our side of the bargain and so have the growers, but Nature Green just hasn't delivered."
Appleton said ginkgo was a classic New Zealand case of growing something well but not getting the processing or marketing right.
"Until they can resolve the issue of successfully processing the leaf into a sufficiently high-value product to get a viable return, I think the whole industry is on hold."
Knight admits errors made
The man behind Nature Green NZ admits mistakes were made but insists there is still good money to be made from growing ginkgo here.
John Knight said in a statement to the Nelson Mail that he felt for Appleton nursery and growers who had been hit by the liquidation of his sales and marketing company.
He said the reasons why it had ceased trading were complicated but included:
- The failure of the original sales contract to sell 100 tonnes of leaf at $20 a kilogram, for which growers were to receive $15 per kg.
- Setting grower payment too high and above the price it was selling leaf for on world markets.
- Building added value sales of processed product proved much slower than budgeted.
The not-for-profit company, owned by Disability Training Services Investment Trust Board, lacked capital and also cashflow, as it had to purchase leaf before being able to test, process or sell it.
Knight said he had been very close to selling the company, which would have given it the capital it needed, but growers' refusal to accept $5/kg for this year's crop meant he had "no choice" but to call in the liquidator.
"I am not blaming the growers for what has happened. There is no one factor here. Many, including myself, have made mistakes.
"I have had phone calls and emails from over half of them since this decision was made, accepting the position I was in and offering their continued support."
He said he continued to believe gingko had a bright future, as growers here produced the best quality leaf in the world and the company had finally gained access to what appeared to be very strong markets.
"I am happy to make myself available to any future grouping or company to help them take the markets I have established further, if that is required."
He said he had been asked by the liquidator to assist with the sale of the business and its assets, which would be done through another company owned by DTS and run by himself, Ginkgo Green NZ. Once the assets were sold, this company would then cease trading, Mr Knight said.
Dispute over leaf ownership
Whether ginkgo growers get any of their money back will hinge on who is deemed to own the leaf they have yet to be paid for.
According to liquidator Kenneth Oliver, Nature Green NZ went under owing secured creditors $703,000 and unsecured creditors - including growers - $983,000 based on a $8 a kilo price for dried leaf.
He estimated the company's assets, which include about 70 tonnes of leaf harvested this year and some powdered product, would fetch $630,00 if marketed in an orderly fashion.
There was interest from Italy and China in the leaf, and he was negotiating to sell the company to a Chinese party already involved in the ginkgo industry.
"Hopefully we will sell the product and maybe if are very lucky we will sell the company ... and that would at least give growers some return."
Oliver dismissed suggestions by Rick Farr, a Nelson lawyer acting for some growers, that the leaf still belonged to them.
He had taken legal advice which clearly showed that Nature Green and now the liquidator owned the crop. "I can understand that growers are upset, but that's the nature of business in New Zealand today, everything is a risk."
However, Farr said the major group of growers he represented were adamant that "legally and morally" they retained ownership of the leaf under the terms of the contracts they signed, that Nature Green was merely the agent and they should get the proceeds of any sale.
He had asked the secured creditors through the liquidator to agree to consult growers on any proposed sale and that the proceeds be held in a trust account until an agreement could be reached by negotiation or arbitration.
If the matter couldn't be settled, growers were prepared to go to court, which initially would involve seeking a freezing order, he said.
In the meantime, growers wanted to know where the large sums of money they paid Nature Green for trees and what they were owed for their crops had gone, Mr Farr said. They did not accept either Knight or Oliver's reasons for the company's collapse.
"They are determined to get to the bottom of what has happened."
Oliver said the company had failed because it was undercapitalised and growers did not accept lower export prices for leaf, but he believed ginkgo growing remained viable and he would welcome an approach from growers.
"If the growers could get their act together and buy the company I think that would be their best out because they would retain the expertise."
- © Fairfax NZ News
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