Kiwifruit marketer Zespri says fruit from about 40 orchards in Bay of Plenty won't be exported this year because growers illegally used the antibiotic streptomycin on their crop.
In September last year, growers received restricted approval to spray the bactericide on their vines in an effort to kill the disease PSA.
Zespri spokesperson Dave Courtney says most growers stuck to the rules, but some have admitted either spraying streptomycin outside the specified time, or illegally injecting it into their vines.
He says the growers came forward to Zespri and have not tried to sneak their produce into the exporter's inventory.
"There's a huge amount of empathy for them in the industry knowing there's probably going to be a significant cost to themselves through not being able to export their crop."
Mr Courtney says Zespri has passed the names of the growers who used streptomycin illegally to the Ministry for Primary Industries.
A ministry spokesperson says staff are looking into the matter.