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The culprit is Trionymus diminutus, a 4mm sap-feeding mealybug that breeds relentlessly when the weather is warm and isn't killed by winter frosts. It deposits a white, waxy substance at the base of the sheathed phormium leaves. A mild infestation is not a problem, but in excess the plants will suffer and could even die.
Solution
Organic
Destroy infested plants. Check new plants carefully to make sure they are not infected.
Chemical
No available chemical completely eradicates the mealybug but malathion helps to reduce it.
