N.Z. takes charge of Fonterra milk scare response

Environment minister cites need to reclaim global trust in industry


New Zealand seized control of Fonterra’s response to a milk contamination scare Tuesday after criticizing the dairy giant’s handling of a crisis that 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 percent 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.

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.”

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

Chief Executive Theo Spierings traveled to China to make a public apology on Monday 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 Saturday, appeared to discount that defense, 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.”

Finance Minister Bill English acknowledged New Zealand’s “100 percent 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.”