Confirmation by Zespri that the mice discovered on board its first shipment of SunGold kiwifruit to Europe were not of New Zealand origin has been met with some relief by post-harvest processors here amid a looming insurance issue.
While unable to provide any further details, Zespri confirmed to Farmers Weekly that the DNA of the mice discovered on docking in Zeebrugge, Belgium, was not of NZ origin.
The chartered refrigerated ship the Crown Garnet docked in late April with 1.2 million trays of early season, high value SunGold fruit on board, the first for the season.
Prior to NZ the ship, owned by Cool Carriers, had departed from South America. The kiwifruit was loaded in Tauranga.
The head of one post-harvest processor told Farmers Weekly it was perplexing to try to understand how the mice would have been from NZ, given the widespread infestation across all 16 holds, and the multiple pack house sources that made up the load.
New Zealand Kiwifruit Growers Incorporated CEO Colin Bond confirmed the industry is working on estimates of the crop being valued at $30 million wholesale value, plus an addition $4m in costs incurred in fruit disposal and efforts to determine infestation levels.
The load is now destined to be used as biofuel feed stock.
“The communication from Zespri so far has been very good. The question will be how will the insurance policy cover that cost, and how long will it take to resolve,” Bond said.
He said given the time likely to take to resolve any insurance claims, the episode is likely to have a direct impact on forecasts for this season’s grower payments.
At $34m, the cost equates to a worst-case loss of 30c a tray to SunGold growers.
“We are very aware of just how long this may take,” Bond said.
Longtime maritime law specialist Pauline Davies of Auckland solicitors Fee Langstone said losses from vermin infestations are uncommon in this part of the world, and this was the first time in 40 years of practice she had heard of such an instance.
Early shipments in chartered ships had experienced some losses through early ripening when shipped with apples, but now the fruits are not carried together.
In a written response to Farmers Weekly she said when a ship is chartered specifically for a cargo there are a range of distinct contractual arrangements.
Broadly, these include a bill of lading subject to international convention, known as the Hague-Visby rules.
These require an overriding obligation on the carrier to use due diligence to make holds and cargo spaces of a ship “fit and safe” for the carriage of the cargo described on the bill of lading.
Zespri has confirmed the ship had a pre-loading survey completed to check for rodent infestation prior to departure from Tauranga.
Failure by the carrier to ensure a “fit and safe” vessel with the cargo damaged as a result gives liability on the part of the shipping company. The shipping company cannot rely on any of the defences that might otherwise be available to it, unless due diligence can be demonstrated.
In terms of insurance claims, she said, the cargo insurer will first be asked to make good its client’s losses.
“Whether and to what extent it does so will depend on the terms of the relevant insurance policy. Most marine cargo policies do not, for example, cover purely financial losses such as loss of profits; they only cover the loss of or damage to the goods themselves.
“The result will be a cargo owner will have losses for which it is compensated by insurance, and other losses for which it is not.”
Once losses are established, any third party believed to be at fault for causing the loss can be asked to reimburse the loss, with the cargo owner’s insurance company taking over the rights of recovery its client would have otherwise had.
She said when such cases go to court they often have an insurance company on one or both sides of the civil action.
