New Zealand takes charge of Fonterra milk scare response

(UPDATED) NZ government says global consumers needed to regain confidence in New Zealand's dairy industry, which accounts for a quarter of the country's exports

DOUBLE CHECK. A woman checks a guarantee announcement on a shelf of Dumex baby formula, which uses the New Zealand dairy Fonterra as its raw material supplier, at a supermarket in Hefei, north China's Anhui province, on August 5, 2013. Photo by AFP

WELLINGTON, New Zealand (UPDATED) – New Zealand seized control of Fonterra’s response to a milk contamination scare Tuesday, August 6, after criticising the dairy giant’s handling of a crisis which has triggered global recalls and tainted the nation’s “clean, green” image.

Economic Development Minister Stephen Joyce said officials had been sent to Fonterra premises in New Zealand and Australia to ensure the company provided accurate information about a potentially fatal bug found in products used to make baby formula.

Joyce acknowledged it was unusual for the government to take such a hands-on approach with a private company but said global consumers needed to regain confidence in New Zealand’s dairy industry, which accounts for a quarter of the country’s exports.

He said data that Fonterra initially provided about the presence of a bacteria that can cause botulism had proved incorrect, leading to contradictory advice and confusion in a saga that has forced product recalls from China to Saudi Arabia.

“It’s certainly pretty frustrating, that’s probably the most generous term I could use,” Joyce told Radio New Zealand. “I’d have expected this information to have been available fairly quickly.”

He said about 90% of the contaminated product had been found and Ministry of Primary Industry (MPI) officials hoped to use Fonterra’s product tracking records to locate the rest by Wednesday afternoon, August 7.

He said Fonterra had not raised any objection to government officials effectively sidelining the company from the crisis management response.

“Frankly, Fonterra has welcomed it because it will speed up the MPI checking,” he said.

“It’s important that MPI, as the regulator, has to have the confidence, because the rest of the world’s regulators are relying on MPI.”

Public apology

Fonterra is the world’s largest dairy cooperative and New Zealand’s biggest company, accounting for 89% of the country’s milk production — 15.4 billion liters — in 2011 and recording turnover of US$15.7 billion last year.

Chief executive Theo Spierings travelled to China to make a public apology on Monday, August 5, and Prime Minister John Key said government ministers would visit Beijing in coming weeks to stress that New Zealand’s food safety regulations were second to none.

Underlining the importance of China to New Zealand’s economy, the prime minister said he would also make the trip himself if necessary.

Key has said the first signs of a problem emerged in May 2012, but Fonterra said it was only alerted to the possible contamination in March this year and that tests were then required to identify the cause and strain of the bacteria.

Spierings said in Beijing that the company informed customers and the authorities within 24 hours of confirming the contamination problem

The prime minister, one of Fonterra’s harshest critics since the scare erupted on Saturday, appeared to discount that defence, saying he could not understand why it did not act as soon as it knew about a potential problem with its whey products.

“If in doubt, be immensely careful — park it up somewhere and work out what’s gone wrong and if there’s a real issue here,” he told TV3. “I can’t tell you why that didn’t happen.”


Fonterra has been accused of failing to learn the lessons of a 2008 scandal when Sanlu, a Chinese company it part-owned, illegally laced milk with the chemical melamine, resulting in six children dying and 300,000 more falling ill.

There have been no reports of children becoming sick during the latest contamination scare, which Fonterra has blamed on a dirty pipe at a North Island processing plant.

Finance Minister Bill English acknowledged New Zealand’s “100% pure” image had taken a hit but said it was too early to put a dollar figure on the damage.

”No-one can really put a number on any long-term reputational effect,” he said. “What we know is that if it’s managed well over the next week or so that will have quite a lot less impact than if it’s managed badly.”

The scare has seen restrictions put on Fonterra products imported into China while Dumex and Karicare, both subsidiaries of French food giant Danone, issued recalls in China, Hong Kong, Malaysia, Singapore, Thailand and New Zealand.

On Tuesday, Chinese authorities said US pharmaceutical company Abbott had also been ordered to recall some products in the country.

New Zealand and Vietnam have both warned parents to avoid some types of Karicare formula, while Russia also reportedly ordered a recall of Fonterra’s products and advised consumers against using them. –

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