Two major kiwifruit packhouses in the Bay of Plenty have baulked from entering a merger because of the industry's uncertain future.

EastPack chairman Ray Sharp says that as a result of the uncertainty over the long term impact of the Psa bacteria outbreak on the kiwifruit industry, and a possible future reduction in crop volumes, it was concluded that the proposed merger with Satara should not proceed.

'Given the current uncertainties it was unwise to go ahead with the deal at this time,” says Ray.

Satara says EastPack indicated that its decision is due to the associated impact on the availability and pricing of capital from their banking provider to fund the merger.

The proposed merger was announced just before the discovery of Psa.

The bacterial vine infection has now been confirmed in over 100 orchards.

New Zealand Kiwifruit Growers Incorporated President Peter Ombler says it is logical that the outbreak of Psa will affect the confidence in the industry.

'It is another layer of risk,” says Peter.

EastPack has suggested to Satara directors that once the long term effects of Psa are known that fresh opportunities that are mutually beneficial to grower shareholders may be able to be explored.

'We are in good shape and we aim to stay that way,” says Ray.

'We have a strong and healthy balance sheet, sound assets which we will retain and the nous to exercise financial prudence because no one knows the long term implications of Psa at this point.”

EastPack has had 23 of its supply orchards affected by Psa. To date three of those orchards, including two which supply EastPack with around 100,000 trays, have had a large proportion, or their entire orchard vines, removed.

Satara has had a reported three orchards confirmed with Psa and believes at this stage the potential impact of Psa on its 2011 crop supply will be minimal.