Fruit farmers challenge Premier’s settlement terms after closing cannery

The Canning Fruit Producers’ Association has accused Premier FMCG of requiring fruit producers to give up potential contractual claims in exchange for financial assistance following the closure of its Tulbagh cannery. Archive photo: Greg Dor

• The Canning Fruit Producers’ Association says Premier’s settlement proposals require growers to surrender existing and potential claims, despite investments in orchards made on the expectation of a long-term market.
• Premier says its supply agreements ended when it exited the canning industry and that growers are not obliged to accept the settlements.
• Premier says it has reached settlement agreements worth R65.5-million with 83 peach producers, offering support for orchard removal, contracted fruit deliveries or transition to alternative markets.

The Canning Fruit Producers’ Association (CFPA) has accused Premier FMCG of requiring fruit producers to give up potential contractual claims in exchange for financial assistance following the closure of its Tulbagh cannery.

The dispute follows Premier’s decision to exit deciduous fruit canning. The Fruit Products Western Cape factory had been a major buyer of peaches and apricots from producers in the Western Cape.

Five producers and Premier were in the Western Cape High Court on Monday. The parties apparently agreed to the terms of a consent order specific to them, although GroundUp has been unable to obtain it.

“Incomplete picture”

In a statement on Wednesday, the CFPA accused Premier of requiring producers to end their supply agreements and release claims against the company, including claims they might not yet know they have.

“Premier presents these arrangements as support for farmers but does not explain the rights they must surrender. That gives the public an incomplete picture.”

“Premier’s payments therefore buy it something valuable: freedom from future supply obligations and potential claims,” it said.

The CFPA said producers made substantial investments in orchards on the understanding that they would have a long-term market through the cannery. It said 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.

The association cited one producer who spent over R3-million expanding its orchards by 10.5 hectares.

“Investments of that kind need a dependable market for many years,” the statement said. “Reassurance for a single harvest does not protect them.”

The CFPA said producers could not find another industrial buyer in such a short timeframe or replace the income from established orchards. Trees take years to establish, while loans, wages and other farm expenses continue. Once fruit ripens, producers have only days to harvest and deliver it before it spoils, the association said.

Premier responds

But Premier disputes this characterisation. Responding to GroundUp, the company said its supply agreements with producers had come to an end when it exited the fruit-canning industry.

“The voluntary settlement proposals therefore do not require producers to cancel their agreements, but offer financial certainty in exchange for resolving outstanding or disputed claims,” Premier said.

Premier said it recognised the significant impact of its decision on producers and remained committed to managing the transition responsibly and fairly.

The company said it had concluded settlement agreements with 83 peach producers, with a total value of R65.5-million. According to Premier, the agreements provide financial support for orchard removal, delivery of contracted fruit or the transition to alternative markets.

Premier said the settlements demonstrated its “substantial commitments” to supporting affected producers. It added the agreements did not affect amounts that might remain payable for fruit delivered during the previous season.

Dispute over the terms offered

The CFPA said Premier had set a deadline of 5pm on 8 November (the day before the court hearing) for producers to decide whether to accept its proposals. The association said it had asked for an additional five days to allow producers more time to consider the terms, but Premier refused.

“Growers deserve fair terms and time to make informed decisions,” the association said. “The public deserves the whole story about what Premier requires in return.”

Premier said the timing of its proposals was informed by the approaching harvest and the need for producers, the company and alternative processors to make arrangements for fruit volumes, processing capacity and deliveries.

The company said producers were not obliged to accept the settlement proposals and remained entitled to pursue their contractual positions through the appropriate dispute-resolution mechanisms.

Premier said it had considered alternative proposals put forward by the association but had not accepted them on the terms presented.

The company said the contractual position of certain producers remained the subject of ongoing legal proceedings and discussions, and that it did not consider it appropriate to debate disputed contractual matters through the media.

Premier reports strong financial results

The association also pointed to Premier’s interim financial results for the six months to September, released this week. It said the company reported revenue of about R14.3-billion, an increase of approximately 39%, and net profit of R1.2-billion, up more than 62%.

The CFPA noted that the results covered the same period in which Premier closed the Tulbagh cannery, stopped buying canning fruit and asked producers to settle their contractual claims.

“A business performing that well has ample room to treat its growers fairly,” the statement said.

Premier has previously said the closure was driven by commercial pressures, including changing global demand, pressure in export markets, rising input costs and low factory utilisation. It has also said it intends to acquire some fruit for the 2026/27 season and has offered compensation to producers for shortfalls.

Premier said it remained 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.

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