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Published August 06, 2013, 09:10 AM

Fonterra apologizes for tainted milk product

Fonterra, a large New Zealand dairy producer, apologized Monday for the contamination of an infant milk formula ingredient with a potentially toxic strain of bacteria.

By: Jonathan Hutchison , New York Times New Service

AUCKLAND, New Zealand — Fonterra, a large New Zealand dairy producer, apologized Monday for the contamination of an infant milk formula ingredient with a potentially toxic strain of bacteria.

The contamination could hurt sales of dairy products, the leading export of New Zealand, to its most crucial market, China.

The infant formula was exported, much of it to China, where consumers had already been upset by contamination in domestic products. Many Chinese consumers prefer to buy imported products because of problems involving domestic brands, and there is an active gray market of products imported by individuals.

Fonterra had $15.7 billion in sales last year, according to a report by Rabobank, a Dutch banking and financial services company. Among global dairy companies, it ranked behind only Nestl, Danone and Lactalis.

“We deeply apologize to the people who have been affected by the issue,” Theo Spierings, chief executive of Fonterra, said Monday at a news conference in Beijing.

He said food safety, not only in China, “but also around the world, is our first and foremost interest.”

Fonterra said the contamination had been traced to a pipe that had not been cleaned properly in one of its New Zealand processing plants. Executives said the source of the problem had been fixed.

The company said three batches of whey protein concentrate, totaling 38 tons, had tested positive for Clostridium botulinum, which can cause botulism, a sometimes fatal illness.

The affected batches of whey protein were produced in May 2012, but the company said the first signs of contamination were not spotted until March, when the product was tested in Australia. The specific strain was not identified until last Wednesday. Fonterra executives have been questioned in New Zealand and China about why it took so long to identify the problem and alert consumers.

Fonterra said eight customers had been affected, in Australia, China, Malaysia, New Zealand, Saudi Arabia, Thailand and Vietnam.

More than half of the affected product went to three companies: Coca-Cola; Wahaha, the Chinese beverage giant; and Vitaco, the New Zealand health food maker, Fonterra said. It said processing methods at those companies had eliminated any danger from the bacterium.

The safety of infant formula has been in the spotlight in China. In 2008, the Chinese dairy company Sanlu and 21 others were found to have added the toxic chemical melamine to bulk up formulas. Six children died and thousands fell ill. Fonterra owned part of Sanlu at the time.

“We totally understand that there’s concern of parents and other consumers around the world,” Spierings said. “Parents have the right to know that infant nutrition and other dairy-related products are 100 percent safe.”

Fonterra is a farmers’ cooperative and is not publicly listed, but it trades nonvoting units as shares on the New Zealand and Australian stock markets. On Monday, the shares opened down about 8 percent on the New Zealand exchange but went on to recover some of their value and closed at 6.86 New Zealand dollars, a decline of 3.65 percent. The RIA Novosti news agency in Russia reported that Russia had banned imports of all Fonterra products, even though it was not on the list of affected countries.

China and Vietnam stopped some dairy imports from New Zealand in response to the contamination scare, but the company said those were not blanket bans. Fonterra said China had banned products made in Australia using Fonterra’s whey protein, which had been produced in New Zealand, but had not banned any Australian whey protein.

New Zealand’s economic development minister, Steven Joyce, flew to Auckland on Monday to meet with senior managers of Fonterra.

The trade minister, Tim Groser, said, “It would be nave to think we’re going to get away without a bloody nose, but let’s hope the damage is limited to that.”

In January, Fonterra disclosed that it had discovered residues of the agricultural chemical dicyandiamide in some of its whole milk powder, skim milk powder and buttermilk powder in September 2012. Although the company said the risks were minimal, use of the chemical on farmland was suspended.

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