Jager says banks 'supported' growers during PSA crisis, 'got good PR' from Zespri as a result
By Jonathan Underhill
Oct. 2 (BusinessDesk) - Zespri Group's outgoing chief executive Lain Jager has told the High Court that the banking sector was supportive of the kiwifruit industry when it was reeling from the outbreak of the Psa virus, helping limit the number of foreclosures from growers forced to rip out infected vines.
Jager is a Crown witness in a negligence suit against the Ministry for Primary Industries that claims it allowed Pseudomonas syringae pv actinidiae, better known as Psa, into New Zealand in 2009 on a shipment of pollen, resulting in 80 percent of kiwifruit orchards nationwide becoming infected at an estimated cost in lost exports of up to $930 million. He was being cross-examined by Michael Heard, lawyer for plaintiffs Strathboss Kiwifruit and Seeka and a group of 212 growers.
"The number of foreclosures in the industry was very small," Jager said. "In the end, the banks did a great job supporting the industry."
He described the relationship between banks and growers as "symbiotic. We supported the banks, keeping them informed on what we were seeing technically. Of course, the banks were very keen to see the industry survive and do well," Jager said. "The last thing they would want was to have to crystallise their losses. We ensured they got good PR exposure for the support they were giving us."
When asked for details of actual support measures from the banks, he said Heard would have to ask individual growers.
Jager retired last month, having held the top job at Zespri since 2008. The statutory kiwifruit exporter has opposed the litigation, arguing that the industry has more than bounced back from the disease thanks to the widespread adoption of the Gold variety G3, known as SunGold, a genetically superior variety to Hort16A, which was all but wiped out by Psa.
Today he was questioned by Heard about the rebound including Zespri's own 2017 results, which included a 21 percent jump in exports of New Zealand-grown fruit to $1.6 billion, and whether there had been an attempt to point at Zespri's numbers as an indication there had been no damage to the industry.
"Not at all," Jager told the court. "But on average the industry has recovered and more than recovered."
He was then asked whether a large driver of growth in Zespri's international sales was a reflection of the company's marketing efforts.
"It's true G3 is a better cultivar than Hort16A so it's supporting stronger market growth," Jager said. "At the same time, it's true that Zespri has invested more heavily in the market than they had historically. Would the industry have achieved demand for Hort16A of 100 million trays as we did SunGold? The taste was not so good, the storage was not so good."
Jager was also quizzed on Zespri's motivation to introduce new varieties, given part of its income comes from licencing fees charged to growers.
"Yes but Zespri is owned by growers," he said. "Growers make money, we get money for royalties and via our commissions on the fruit sales. So we've a corporate and a grower interest in developing new varieties. Sometimes there are tensions between those interests."
Some 90 percent of his bonus was tied to grower returns and 10 percent to corporate returns, he added.
G3 was already being advanced as a new variety along with the unsuccessful G9 ahead of the expiry of older varieties before PSA emerged, he said.
Zespri had played a key liaison role with the Ministry for Primary Industries, formerly MAF, after the outbreak. Heard asked Jager about an email from 2012, providing his feedback to a report consultancy Sapere was asked to compile in the wake of the outbreak, which suggested MAF "didn't alert Zespri to the pollen pathway until after Psa had entered New Zealand," even though Psa was having a devastating impact on growers in Italy.
"At the time I think the view of our people, we were seeing this happening in Italy (but) it's not clear to me we should have joined up the dots better than we did," Jager said.
Asked whether MAF should have consulted the industry when it was approving the importation of pollen, Jager said it wasn't clear at the time whether pollen was even a vector. "Our view, and it would still be that it would have been better if MPI had talked to us at the time. We had a strong interest."
The case began in August and was set down for about three months.