Ginkgo growers face bitter choices
Nelson ginkgo growers are weighing up whether to harvest their crops this season after losing several hundred thousand dollars in the collapse of the company set up to develop the budding industry.
Nature Green NZ went into voluntary liquidation in July, owing three secured creditors about $700,000, and another 30 or so unsecured creditors, including growers and sole shareholder Disability Training Services Investment Trust Board, an estimated $980,000, based on a $8 a kilogram price for dried ginkgo leaf, which is marketed as a herbal medicine.
The failure of the Napier-based company, which sold about one million trees to growers in Nelson, Hawke's Bay, Bay of Plenty and Waikato through Appletons nursery, in return for agreeing to buy their leaf, has led to finger-pointing and threats of legal action between its founder, John Knight, and angry growers who have not been paid for some of their 2011 crop and any of their 2012 crop.
Armed with a legal opinion saying the leaf belonged to Nature Green, the company's first liquidator, Kenneth Oliver, sold almost all the 70 tonnes it held to an Italian buyer for the equivalent of about $3.65/kg, enraging creditors, who replaced him with Levin accountant and insolvency specialist David Petterson at a recent meeting.
Oliver said the price was the best he could get, because the bottom had fallen out of the market and there were few buyers.
He said he felt for growers, who had originally been promised $15/kg by Mr Knight and then turned down $5/kg earlier this year, and it was understandable that they were looking for someone to blame.
"They hate my guts because they think they still own the leaf, but they don't."
Oliver said the only asset left to sell was 500kg of ginkgo extract, which was worth anywhere between $100/kg and $500/kg, depending on its condition and how much interest there was.
Even if the extract was sold for a good price, it was almost certain that growers would not get any of their money back, because it would all go to paying off secured creditors, one of whom held a security over the leaf, he said.
"That's the reality of global marketing. If you are going to play with the big boys, there is a chance you are going to get your fingers burnt."
Petterson was reluctant to comment, saying he was still reviewing the company's accounts and incomplete documentation and there was a lot to sort out. However, he agreed with Oliver's legal opinion that the company, rather than the growers, owned the leaf, and this meant it was highly unlikely that unsecured creditors would be paid.
Petterson said he hoped to report back to a creditors' committee within a few weeks.
Redwood Valley grower John Fitzgerald, a member of the committee, said the collapse of Nature Green was "a bombshell" that had hurt a lot of people and had left several in danger of losing their properties.
It was too soon to say whether growing ginkgo had a future, and things would be clearer after the liquidation process had run its course, he said. Growers were still investigating whether to pick up the pieces and form their own industry group, but to continue, they would need contracts in place before they harvested.
Another grower, Keith Gorton, of Wakefield, said he still believed ginkgo was worth growing, but only if it could be sold as extract.
"Ultimately, if we can get into processing it ourselves, I think there will be a reasonable return from it. It really depends on what happens over the next few months as to whether we can keep the industry together."
Gorton, who has had one harvest off his 1.5-hectare crop, said the Nature Green saga had left him "badly bruised" but not put off.
While initially optimistic that "it would give me some play money in my retirement years", he was now resigned to not being paid for his 2012 leaf.
One of the region's first growers, Doug Pook, of Riwaka, also does not expect to see any of the $80,000 he is owed.
He said he would wait until February before deciding whether his latest crop was worth harvesting. If not, he would pull out his trees and resow the land in grass.
He was struggling to find a buyer willing to pay even $5/kg, which would allow him to at least break even.
"There is a market but, realistically, it's not worth much."
In the meantime, the harvester he had spend a lot of money converting would be used for grapes and was for sale, he said.
Pook said growers were paying the price for not doing their homework on Knight.
Disability Training Services (DTS), which supports and trains about 60 disabled people and helps them find work, looks to have lost $110,000 it advanced to Nature Green, its investment arm, and has its Napier building on the market.
Knight, who also chairs the trust board, said the loss of the building, which was worth $570,000, would not directly affect DTS. It was looking to lease another property anyway, and the trust would continue to support the service.