A mushroom farm which got a $19 million loan from the government will let around 100 of its staff go and close much of its factory.
Te Mata Mushrooms in Havelock North. Photo: RNZ / Cole Eastham-Farrelly
Te Mata Mushrooms, in Havelock North, is the second largest commercial mushroom farm in the country and supplies mushrooms around the Central North Island and Auckland.
It also has one of the largest non-seasonal horticultural workforces in Hawke's Bay.
It was given the Covid-19 Infrastructure Investment Fund loan in 2020 to help expand and improve its facilities, with former infrastructure minister Shane Jones excited about "sustainable full-time employment for more than 200 people".
The business had been operating for 55 years in the Hawke's Bay township, but the company said the facility was no longer fit for purpose.
No one from the company was available for an interview.
In a statement, company chairman John Seton blamed the "current regulatory regime and with the pressures caused by urban encroachment on established agricultural production".
"It's very disappointing that we need to close the facility. Despite our best efforts to resolve issues with a very outdated facility that puts our staff as well as ongoing revenue at risk, the best decision is to suspend production."
Residents have said they were sick of "putrid" smells of "cow poo".
There was much debate about how the smell could be improved.
Some of the loan was supposed to be for expanding the growing Havelock North facilities and upgrading the existing composting facility. The enclosure of the buildings and use of new bio-filter technology was supposed to eliminate smell issues for residents.
Staff were notified of the facility's shut-down on Tuesday and were offered support by the board and senior management alongside the Ministry of Social Development, which appointed an early response representative for the company and its staff.
Staff would remain employed while final crops were picked and supplied to customers over a month to six weeks. Te Mata Mushrooms has 110 staff and overtime this would be reduced to a skeleton staff of 10-15.
The business has operated in the Hawke's Bay for 55 years. Photo: RNZ / Cole Eastham-Farrelly
Some staff had been with the company for over 30 years.
In April, the company was bought by Hawke's Bay investment company True North, from previous owner Michael Whittaker.
The company had invested additional capital and key project consultants to fast-track infrastructure and process improvements, including new compost-making technology.
"Our staff, project support team, and the board have worked tirelessly over the last four months to maintain normal production levels but we have been let down by the ageing infrastructure, which presented potential health and safety risks for staff as well as significantly compromising its mushroom growing capacity," a statement read.
Under the previous ownership, the company announced plans to relocate some of its facilities to Central Hawke's Bay, with help from a Covid-19 Infrastructure Investment Fund loan.
This was still the plan, but a spokesperson said the new facility was two to three years away so could not keep its people in their jobs. The Havelock North facility was now too outdated to continue production.
Resource consent for the Central Hawke's Bay facility was being processed, with designs being finalised.
"Our future location is best placed to be in Central Hawke's Bay, which will bring economic benefits to the area as well as new jobs for local people. We still plan, however, to be back growing mushrooms on our Brookvale [Havelock North] facility using compost made at Takapau", Seton said in his statement.
In 2020, Shane Jones said the construction of the new facility in Central Hawke's Bay would create 107 building jobs for the region.
Kānoa is the government's regional economic development and investment unit.
In a statement, its head of investment management David van der Zouwe said Te Mata Mushrooms informed Kānoa of its decision on Wednesday.
"Kānoa - RDU will assess its investment in the project in light of these developments," he said.
Van der Zouwe said the company was approved for a loan of up to $19.5 million, of which $3,549,101.62 had been paid out as of June 30.
Former owner Michael Whittaker did not return a request for comment.
Clarification: RNZ was initally told by Te Mata Mushrooms the $19.5 million loan was from the Provincial Growth Fund. Kānoa has clarified it was actually from the Covid-19 Infrastructure Investment Fund.