New Zealand’s Fonterra Apologizes for Milk-Powder Scare

dairy giant Fonterra apologized on Monday for a contamination scare involving whey protein products tainted with Clostridium botulinum. From The Wall Street Journal:

Chief Executive Theo Spierings traveled to China immediately after the company publicly disclosed the problem on Saturday, and on Monday he offered “deep apologies.”

New Zealand Prime Minister John Key promised to investigate the dairy giant. “There is no question this does damage to New Zealand and to Fonterra,” Mr. Key said Monday. “There will be a couple of inquiries. The first will be about Fonterra itself,” he said. Mr. Key has raised questions about the length of time it took Fonterra to make the situation public.

Early Saturday, Fonterra said some of its exported whey protein products may contain Clostridium botulinum, a bacteria that can cause botulism, which affects the nervous and respiratory systems. [Source]

The botulism scare prompted Beijing to ban the import and sale of a selection of Fonterra’s dairy products, spurring a surge in Chinese rivals’ share prices. AP reports:

The import bans in Russia and China extend beyond the products now being specifically targeted for recall. How long those trade halts last could indicate the extent of the damage to New Zealand’s reputation as a source of top-quality dairy products.

Dairy and other agricultural exports power the country’s economy, and China is its single biggest export market. An indication of the seriousness of the threat to New Zealand’s trade came over the weekend, when the government assigned 60 officials to work on the botulism scare. Fonterra is the world’s fourth-largest dairy company, with annual revenue of about $16 billion.

Consumers in China and elsewhere have been willing to pay a premium for New Zealand because of high standards and the popular image of the country as a remote, unspoiled environment. Chinese consumers have a special interest after tainted local milk formula killed six babies in 2008. [Source]

A detailed list of products, companies, and countries affected by the Fonterra Clostridium botulinum contamination is available at Global Times.

Referring to Fonterra’s 43% stake in the scandal-struck Group, a Xinhua commentary argued that the New Zealand government must strengthen its food regulatory system if it is to realize its goal of becoming “a major supplier of quality food to the growing Asian market.”

While it’s true the government isn’t responsible for the contamination of Fonterra produce, it should be held accountable for the fact that nothing was done to identify the problem before it was dispatched to export markets and domestic customers.

[…] The constant push for exports and foreign investment stems, New Zealanders are told, from the country’s desperate need for inward capital, but rather than lay down standards and principles to build trust, the government appears to adopt the quality-free rationale of the foreign trade: sell in bulk while the window is open and move on to the next deal.

The country is set to become a major supplier of quality food to the growing Asian market, New Zealanders are told. In June, Economic Development Minister Steven Joyce said New Zealand could become a “fruit bowl for Asia.”

Those visions can only be built on trust and trust comes from regulatory systems that work, as China and Fonterra found with the Sanlu melamine scandal in 2008. [Source]

Parents in China, many of whom have counted on imported baby milk formula for quality, now face a difficult choice. From Reuters:

“Domestic brands aren’t very good. Now, neither are foreign brands,” said Zheng Zhiqing, who was buying formula for his grandson in Shanghai. “I have no idea how I should choose.”

Zizi Zhang, 36, said she feeds her 18-month-old child formula milk imported from the United States. “My impression of New Zealand formula was really good … the cows and sheep are healthy, so you think the milk they produce is of a higher quality. I doubt people will switch to domestic milk powder. I’m even more nervous (now). All mothers will react this way. I just hope now that the U.S. won’t have problems.”

Nearly 90 percent of China’s $1.9 billion in milk powder imports last year originated in New Zealand, with the lion’s share coming from Fonterra, which manufactures milk powder for other companies to sell in China. [Source]

The New York Times’ Edward Wong discussed milk safety and other dilemmas faced by parents in China on Saturday. On Monday, The Daily Telegraph’s Malcolm Moore attended Fonterra’s press conference in Beijing: