An interim report by the regulatory Apple & Pear Marketing Board has posed an interesting question mark over the right of fruit exporter Enza to pass on NZ$54m (US$22.3m) in foreign exchange (forex) losses to aggrieved growers.

Some of the forex options entered into by Enza before it underwent corporatisation early last year were actually in breach of regulations, said the report, because they involved non-core operations. Enza could in fact have capped the losses at NZ$28m if it had not taken out further options in the misguided belief that the exchange rate would become more favourable.

The report concluded: "The package contained sold call options that increased exposure rather than reduced risk and were therefore not a hedging instrument. They were therefore not necessary to the core business and, as they represented more than a minimal risk for suppliers, they represent a breach."

Enza, who wants to repay the losses by debiting growers' accounts by NZ$4.50 per carton, is adamant that the report only confuses the issue. The company may make submissions to the board during the next fortnight.