Jeremy Kerr's threat to contaminate milk formula with the poison 1080 was the "straw that broke the camel's back", putting some smaller exporters out of business, says an industry boss.

"I have a look at the small exporters - I can see the botulism scare and issues arising from the Chinese market and then this coming in. This was the straw that broke the camel's back. This was the one that shut off the market to them and meant that for weeks and weeks ... they stopped sending product and ... lost the confidence of their customers in China," said Michael Barnett, chairman of the New Zealand Infant Formula Exporters Association.

While prosecutor Christine Gordon yesterday put the cost of Kerr's blackmail at $37 million, Barnett said the damage done to some exporters will take years to repair.

Justice Geoffrey Venning, who yesterday sentenced Kerr to eight and a half years' jail, said that the potential impact of his actions on New Zealand's trade relationship with China and others was "extremely serious".


Kerr, the owner of another pest-control product, Feratox, mixed highly concentrated amounts of 1080 with baby milk formula and posted them to Fonterra and to Federated Farmers. Included in the package was a letter demanding the country stop using 1080 or he would release poisoned infant milk powder into the Chinese market and one unspecified market.

He cost the country as much as $40 million. Sales of infant baby formula tanked overnight, particularly to China, the biggest foreign buyer.


The contamination threat is estimated to have cost Fonterra, the world's largest dairy exporter, more than $20 million.

Although Kerr's jailing sent a message to anyone who might try something similar, Barnett reckoned some exporters were worse off than the convicted businessman.

"There are some out there who will probably look and say, they've invested five or six years into this market and now they're [out of] that market. So who's paid the higher price? Somehow I think some of these small exporters did," Barnett said.

Federated Farmers chief executive Graham Smith didn't hold back when giving a victim statement at Kerr's sentencing in Auckland yesterday.

The 60-year-old's threat, according to Smith, was a "direct attack on the very fabric of society".

Fonterra's Maury Leyland also didn't mince her words.

"It's hard to imagine a worse threat to children and families, or to the viability of our co-operative, the wider dairy industry and our country," said Leyland, who is Fonterra's managing director of people, culture and safety.

Scott Gallacher, of the Ministry for Primary Industries, said the 1080 letter was a "credible threat" to food safety.

MPI informed overseas markets to ensure minimal risk to overseas consumers and the impact on trade, he said.

Had these interactions not been successful, the country faced a real risk of suspension of trade and dairy exports to these markets, he said. It could have caused the fall of up to $4.2 billion in dairy export revenue over a year and a $7.5 billion or 3 per cent reduction in nominal GDP in 2015.