A flooded Hawke's Bay orchard after Cyclone Gabrielle. Photo: Supplied / Catherine Wedd
A Hawke's Bay fruit grower has harshly criticised the government's loan scheme for cyclone-affected growers and farmers, saying it helps the banks more than those whose livelihoods were destroyed.
The government will support banks to grant lower-interest loans of up to $10 million over five years, and carry 80 percent of the credit risk.
If the bank will not lend, the government will lend up to $4 million, deferring interest for 10 years - but only if the land is at least 30 percent damaged.
Hawke's Bay Growers had previously asked for $750 million to cover costs created by Cyclone Gabrielle.
Paul Paynter, owner of Hawke's Bay-based The Yummy Fruit Company, said the businesses with the best chance of survival are those whose damage is between 20 and 30 percent. His business lost about 30 percent of its growing area in Cyclone Gabrielle.
He told Morning Report on Friday the government scheme would not do enough to get the industry back on its feet.
"This scheme is very good about making the taxpayers give the banks some security and a guarantee of their loans, and I think the banks should be commended for being so very clever to get this across the line. But it doesn't actually help the people rebuild their house or reestablish their income."
He said a big part of the problem was no one knew what the damaged orchards were now worth, and there were "no buyers" anyway.
"The banks have been given some guarantees and assurances, but they're not going to make new loans… the value of their security has been devastated and the earnings of the companies involved have also been eroded significantly. So for the foreseeable future, if half of your orchard is destroyed, your income's half, so they can't bank you on."
Paul Paynter. Photo: RNZ / Jimmy Ellingham
Paynter said the lower interest rates on offer would not help much, if at all.
"The problem is that it's going to cost millions to reestablish these orchards, and the banks will not be issuing loans to do so.
"They're just going to use this for security and there's still no pathway for us to reestablish our orchards or get back on our feet. Our assets are hammered and our ability to earn revenue is hammered, so we are still in the same pickle."
Details missing
Hawke's Bay Federated Farmers president Jim Galloway was not quite so critical, but still thought the government had missed the mark in some ways.
He told Morning Report it was now up to the banks to start lending - which was not guaranteed.
"It's still totally up to the banks to how they see it because [the lower interest rates are] only for five years, so businesses still need to be able to be viable and profitable and maybe even innovate, because people need to redesign and rebuild better.
"It's not just a rebuild or where we were necessarily, it's being able to innovate and do different things - so that may be more expensive than, just straight rebuilding."
He said there was still detail missing from how the government would decide if a grower or farmer was eligible.
"It's a very high bar to meet it. I'm not quite sure - there's a lot of details missing yet about how the government does the loan assessment? And is it going to be through the banks? The banks have done theirs and said no, so how is the government going to assess the viability of the business going forward?
"I hadn't heard that it's gonna be deferred 10 years of interest, that is going to make a difference, but you've still got that bill at the end of it. So, you know it's not free, it's not cheap… it's still a cost on the business going forward, and whether they can actually afford it."
He hoped for a Christchurch- or Covid-style response with more cash grants, rather than loans, but said most growers were not expecting a "huge amount".
"The hill country farmers have had nothing except for the $10,000 initial grant, so they've sort of felt almost forgotten up there a little bit.
"They may be able to use the government guarantee, but if you've got $500,000 or even $300,000 worth of damage, It's a lot of interest. That [estimated] interest rate [drop] at only 0.9% is $9000 a year on a million dollars sort of thing. So it's, it's not going to go very far to helping towards that. So that there's not a lot of support really for people unless they've got a large loan and they can get a big drop in that interest rate from the bank.
"So there's not all that much support when you look at it in those terms."
Paynter and Galloway's views on Friday were somewhat in contrast to those offered by Horticulture New Zealand on Thursday, directly after Emergency Management Minister Kieran McAnulty's announcement.
Nadine Tunley, chief executive of Horticulture New Zealand - which worked with the government on designing the package - said it was a "good package that will enable businesses to build back, and that is what they've been looking for".
Paynter said industry reps had been "duped".
"I think they've basically been told 'this is the best deal we can get', and they're becoming good advocates for the government.
"But in terms of achieving constructive outcomes for their industry, I think this might be necessary to keep the banks quiet because it will stop any liquidations particularly before the election, but it'll slow the cycle of which the banks will tip people over.
"So, you know, maybe that's necessary, but it's not sufficient. They haven't delivered an outcome that helps their members recover. There is no pathway to recovery."
