New Zealand Takes Charge of Fonterra Milk Contamination Scare

New Zealand seized control of Fonterra's response to a milk contamination scare after criticising the dairy giant's handling of a crisis.

This has triggered global recalls and tainted the nation's "clean, green" image.

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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 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, creating confusion in a saga that has forced product recalls from China to Saudi Arabia.

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"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 the Ministry of Primary Industry (MPI) hoped to track down the rest by Wednesday afternoon.

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Joyce said Fonterra had raised no objections 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.

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"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 litres -- 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 and Prime Minister John Key said government ministers would also visit Beijing to stress that New Zealand's food safety regulations were second to none.

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

Key has said the indications of a problem emerged in May 2012, but Fonterra said it only knew about possible contamination in March this year and further tests were then required to check if it was a toxic 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.

"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 percent pure" image had taken a hit but said it was too early to put a dollar figure on the damage.

"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," he said.

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, while Sri Lanka recalled all New Zealand-made milk products.

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.

Source-AFP