Government working with Kiwifruit industry on possible future financial assistance for PSA recovery, Carter says

The government is not ruling out further financial assistance for the kiwifruit industry following calls for it to guarantee bank lending to growers to help them recover from the PSA virus.

But while further assistance is being considered, that is unlikely to come as such a guarantee.

A new report on the effects of PSA on the kiwifruit industry by Lincoln University suggests disruptions stemming from the virus will cost it up to NZ$880 million over the next 15 years, Radio NZ reported this morning. Before PSA hit in 2010, the industry exported about NZ$1.3 billion worth of kiwifruit a year.

At midday, Radio NZ reported growers calling for the government to step in and guarantee bank lending for growers trying to recover from the disease. One grower told Radio NZ many had nothing to produce, and now had properties worth less than what they owed on them.

Minister for Primary Industries David Carter told interest.co.nz in emailed comments that from the outset of the PSA outbreak, the Ministry for Primary Industries [formerly MAF] "has worked hand in hand with the kiwifruit industry to support growers in the management of the disease. 

"This includes a Government contribution of NZ$25 million, matched by industry, for a disease fighting fund," Carter said in relation to the government's initial response to the outbreak.

"The Government is continuing to work with the industry to consider what possible further assistance may be given," Carter said.

Speaking to media in Parliament Buildings before Question Time on Thursday afternoon, Carter said the government recognised the importance of the Kiwifruit industry to New Zealand. Carter said while he'd had a number of discussions with the industry, they had included nothing specific about dollar-amounts of possible assistance.

Unlikely to be bank loan guarantee

Finance Minister Bill English told media in Parliament Buildings on Thursday afternoon the government had already put NZ$25 million toward helping the industry.

"It's unlikely we'll be offering them bank guarantees," he said.

"People can always approach the government, but we've already put in NZ$25 million in cash, and that's been pretty helpful for them."

'Sensible moves to date'

Meanwhile, Bank of New Zealand CEO Andrew Thorburn told interest.co.nz from Melbourne, where BNZ's parent National Australia Bank released its half-year financial results today, that BNZ was "absolutely" continuing to support struggling customers in the kiwifruit sector.

"Our philosophy has always been 'reputations are won and made during difficult times.' Since the GFC I think our record as a bank of supporting New Zealand businesses and supporting existing clients, including Kiwifruit clients, has been first class. I would absolutely say that with great confidence," Thorburn said.

"I know our people who work on difficult situations and I think they're very balanced and very fair. They take a quality medium-term approach balancing a lot of things and I think kiwifruit will be no exception to that," he said.

Thorburn said he wasn't aware of the call from the kiwifruit industry for government support.

Meanwhile, BNZ's Kiwifruit exposure wasn't a significant amount, he said. 

"It's obviously tough for the industry but our exposure's quite limited. We've got a good provision around it, so I don't think it's going to be a significant stress to us in an asset quality sense."

Thorburn said the PSA problem was "obviously concerning" but there had been "sensible and considered" moves to date by growers and the industry to deal with it.

In March, RaboBank said it was committed to the Kiwifruit industry for the long-term, and that challenges were being monitored.

Big hit

In December 2011, MAF, which has since been renamed Ministry for Primary Industries, forecast New Zealand's kiwifruit export returns could fall by up to 25% in the year to March 2013 due to PSA.

“The impact Psa has had over the past year, and will continue to have on rural businesses and communities has raised the question of the government’s role in assisting recovery and MAF is investigating options,” it said in a statement.

(Updates with Finance Minister Bill English saying assistance unlikely to come as guaranteed bank lending, with BNZ comments.)