A UK top fruit packing project that was hailed as a major step forward for the fruit industry went out of business this week - less than a year after opening.

Fruit First, which began operating last summer, stored, graded, packed and distributed apples and pears from a state-of-the-art facility in Faversham, Kent.

The facility, a joint venture between marketer Worldwide Fruit, distributor Gaskains and importer Richard Hochfeld, had cost an estimated £7m to develop. It was launched amid much fanfare, with operating directors Charles Gaskain and Richard Day describing it as a "turning point" for the industry.

By consolidating three packhouses under one roof, the partner companies had hoped to make the process of supplying the supermarkets more efficient and cost-effective.

However the project was beset by project management issues in its initial stages and capital spending had been more than expected, according to Worldwide Fruit chief executive Robert Balicki. The facility had only handled 55,000 bins in its first year, compared with the 75,000 originally anticipated.

Balicki would not divulge the level of losses suffered by the companies involved. Though Fruit First had gone out of business, he insisted the rationale behind setting it up had been sound.

Balicki said he was confident growers would be able to find alternative packhouses for top fruit in time to meet orders for 2008/09.

Adrian Barlow, chief executive of English Apples & Pears, said Fruit First's demise was "extremely unfortunate" for the top fruit industry.

"It's tragedy, especially when there's so much demand for English fruit," he said. "We must make certain the industry has sufficient packing, grading and storage facilities to provide for that and minimise any negative impacts."

A separate company, Fruit First (Select), which was also set up last year as a storage, packing and distribution facility for imported grapes, stone fruit and kiwi, has been unaffected by this week's announcement.

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