Tainted dairy stocks removed from market: Fonterra CEO

TN News

Email Print

An Abbott Laboratories sales staff checks the serial number of a powder milk tin during a production recall at a milk shop outside Hanoi August 6. PHOTO: REUTERS

The chief executive of New Zealand's Fonterra said his future was up to the board of the world's biggest dairy exporter after human error resulted in some of its products being contaminated and shipped around the world.

Theo Spierings, a Dutchman and dairy industry veteran, sought on Wednesday to reassure customers and worried parents who feed their infants with formula milk made from Fonterra's whey protein concentrate, saying all tainted stocks had been taken out of the market and there was now little or no risk to consumers.

New Zealand, which depends on the dairy industry for a quarter of its total exports, has been gripped by worries that a raft of recalls for infant formula in China, a major market, and other countries could snowball into a slump in demand or even bans for other dairy products.

Fonterra said at the weekend it had discovered whey protein products that contained a bacteria that can cause botulism. It said previously its tests had found the contamination in a dirty pipe at one of its plants. No illnesses have been reported due to the contamination.

Spierings said affected customers, including The Coca-Cola Co, Danone SA and China's Wahaha, had been focused on removing potentially contaminated products from shelves, rather than on compensation.

"There has been not a single discussion with me and their top teams on money so far. But there will be these discussions later on," Spierings said.

Fonterra's plans to expand in China with more farms, an ultra heat-treated milk plant and branded baby formula remained on track, he added.

Units in Fonterra's Shareholders Fund, which offer outside investors exposure to the cooperative's farmer shareholder dividends, rose 1.15 percent to NZ$7.03, and have erased almost all of their losses since news of the scare first broke.

Economy escapes

Questions remained over Fonterra's promptness in disclosing the contamination issue and its dealings with the Ministry of Primary Industries (MPI).

"There's definitely some time there that we're not happy with - how long it took to get to work with the MPI, to give them some information, so this is going to be part of our review," said Gary Romano, Fonterra's managing director of New Zealand Milk Products.

The MPI, which has dispatched people to work in Fonterra offices to oversee the crisis response, said it was asking questions about the reporting timeline and Fonterra's processes.

Finance Minister Bill English told parliament earlier that the scare did not appear to have had much impact on the economy, but would need careful handling if Fonterra and New Zealand were to continue to benefit from high commodity prices.

But Trade Minister Tim Groser said New Zealand had a lot of work to do to regain trust among global customers. "The market is being very measured in its reaction, in the same way that Chinese authorities have been very measured in their actions," he told Radio New Zealand 

Auction reassures

At Fonterra's first international auction of its dairy products since news of the contamination - which didn't include those products connected with the scare - prices slipped 2.4 percent, but stayed near their recent high levels on the back of strong demand from growing middle classes in emerging economies.

The fortnightly auction, the biggest wholesale marketplace for milk powders and dairy produce, saw a near doubling in volumes made available.

US dairy futures fell on Tuesday, reversing recent gains, as traders unwound speculative bets that China may shun some dairy products from New Zealand, and instead buy from other countries, including the United States.

Fonterra said it was fined NZ$900,000 (US$705,000) by China's top economic planning agency after a review of pricing practices for consumer dairy products in mainland China. Five other companies were also penalized.

More World News