Fruit farmers challenge Premier's settlement terms after cannery closure

The Canning Fruit Producers' Association (CFPA) has accused Premier of requiring fruit producers to surrender potential contractual claims in exchange for financial assistance after the closure of its Tulbagh cannery. This dispute arises from Premier's decision to exit the deciduous fruit canning industry. The CFPA claims that Premier's payments not only provide financial support but also buy the company freedom from future supply obligations and potential claims.

The Fruit Products Western Cape factory was a significant buyer of peaches and apricots from Western Cape producers. Following the closure, five producers and Premier were in the Western Cape High Court last week, where they apparently agreed to the terms of a consent order. The CFPA stated that producers made substantial investments in orchards based on the understanding that they would have a long-term market through the cannery.

According to the CFPA, the previous owner, Rhodes Food Group (RFG), encouraged new planting, requested five-year production plans, and assured producers that the merger with Premier would not change their arrangements. One producer spent more than R3m expanding its orchards by 10.5 ha. The association argues that investments of this kind require a dependable market for many years, and reassurance for a single harvest does not protect them.

Premier disputes the CFPA's characterization, stating that its supply agreements with producers had come to an end when it exited the fruit-canning industry. The company claims that its voluntary settlement proposals offer financial certainty in exchange for resolving outstanding or disputed claims, not requiring producers to cancel their agreements. Premier reported that it had concluded settlement agreements with 83 peach producers, with a total value of R65.5m.

The CFPA said Premier had set a deadline of 5pm on November 8 for producers to decide whether to accept its proposals. The association had asked for an additional five days to allow producers more time to consider the terms, but Premier refused. The CFPA argues that growers deserve fair terms and time to make informed decisions, and the public deserves the whole story about what Premier requires in return.

Premier said it had considered alternative proposals put forward by the association but had not accepted them on the terms presented. The company noted that the contractual position of certain producers remained the subject of ongoing legal proceedings and discussions. The association also pointed to Premier's financial results for the six months to September, which reported revenue of about R14.3bn and net profit of R1.2bn.

Premier has previously cited commercial pressures, including changing global demand and rising input costs, as reasons for the closure. The company remains committed to constructive engagement with affected producers and their representatives, implementing arrangements already concluded and working towards practical outcomes that provide certainty and support during the transition.

Key points

• The Canning Fruit Producers' Association accuses Premier of requiring producers to surrender potential contractual claims in exchange for financial assistance.
• Premier claims that its voluntary settlement proposals offer financial certainty in exchange for resolving outstanding or disputed claims.
• The company has concluded settlement agreements with 83 peach producers, with a total value of R65.5m.