Horticulture New Zealand fears growers' margins may be squeezed even further if a Government proposal to increase GST goes ahead.
As part of a package of tax changes, the Government is considering raising GST to 15%.
The horticulture industry body says an increase in GST is not likely to be reflected in retail prices for fresh fruit and vegetables, and instead, growers will end up having to absorb this cost.
Its president, Andrew Fenton, says his organisation is urging the Government to find others ways to increase its revenue so that growers supply the domestic market are not financially disadvantaged.
He says supermarket chain Pak'n Save has been running an advertising campaign stating it will not pass on any increase in costs if the GST hike goes ahead.
However Pak'n'Save owner Foodstuffs says the "Price Drop Zone" promotion, for supermarkets north of Taupo, is mostly for grocery, chilled, frozen and dry products.
The company's Auckland retail general manager, Murray Jordan, says if GST rises there will have to be some reflection in the prices.
