Mon, Aug 12, 2013 - Page 15 News List

All NZ exports hit by milk powder scare

Bloomberg

New Zealand’s entire export industry has suffered from the contamination scare that prompted China to halt imports of milk powder made by Fonterra Cooperative Group Ltd, New Zealand Prime Minister John Key said.

Damage from the incident would be hard to quantify as it hit all of New Zealand’s exports around the world, rather than just dairy sales to China, Key said in an interview with Television New Zealand yesterday.

In a separate interview, Fonterra chief executive officer Theo Spierings put the cost at “tens of millions” of New Zealand dollars.

“Fonterra is the poster child for New Zealand’s exporting, whether we like that or not,” Key said, according to a transcript of the interview. “It’s really about what is the damage to New Zealand’s reputation, both for Fonterra and for dairy products, but also for the wider products we sell into the Chinese market and other markets overseas.”

On Aug. 3, Fonterra, the world’s largest dairy exporter and the country’s biggest company, said a dirty pipe at a processing plant may have tainted whey protein used in milk powder with botulism-causing bacteria.

China halted imports of some Fonterra products and Xinhua news agency said buyers were losing faith in New Zealand’s clean image.

New Zealand Foreign Minister Murray McCully will visit China in about a week and New Zealand Minister of Trade Tim Groser will follow him in a “few weeks or months,” Kelly Boxall, Key’s spokeswoman, said yesterday.

Key will wait to visit Beijing until an inquiry into the incident is complete because “he wants to be able to look them in the eye and give them answers,” she said.

Fonterra also recalled about 40 tonnes of milk powder sent to Sri Lanka, Spierings said in the interview on Television New Zealand.

The company was disputing the recall, a separate advertising ban and the Sri Lankan government’s claim that the powder contained dicyandiamide, or DCD, an agricultural chemical, he said.

“With all the noise of this last week, people are connecting the dots, and that’s why this is happening,” Spierings said, according to an interview transcript.

A report by Sri Lanka’s Industrial Technology Institute said two batches of milk powder contained DCD, and the country’s ministry of health had told Fonterra’s Sri Lankan division in a letter of its ban on local adverts, Sanath Mahawithanage, associate director of regulatory affairs at the company’s unit, said by telephone.

Dairy products are New Zealand’s biggest foreign-exchange earner, accounting for 28 percent of overseas sales in an economy where exports make up about a third of output.

Fonterra accounts for about a third of the world’s trade in dairy products and posted revenue of NZ$19.8 billion (US$15.9 billion) in the year through July last year.

Criticism of the country’s image was being driven by “opponents” who “want to create mischief,” Key said, singling out the Daily Mail, a UK newspaper, which criticized the country’s environmental record.

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