New Zealand dairy firm tries to contain Chinese milk scandal

The head of New Zealand’s Fonterra flew to Beijing yesterday in an attempt to contain the fallout of the botulism scandal surrounding its products and China’s consequent banning of all New Zealand milk powder imports.

In a major blow to New Zealand’s reputation as a supplier of safe, high-quality food, Fonterra said contaminated whey protein concentrate had been exported to China, Malaysia, Vietnam, Thailand and Saudi Arabia and used in up to 1,000 tons of products, including infant milk powder and sports drinks. Russia has also decided to stop importing some New Zealand dairy products.

China is New Zealand's single biggest export market, and the country has set up a major task force to deal with the crisis.

Food safety
Fonterra chief executive Theo Spierings said food safety was the company's top priority.

“We totally understand there is concern by parents and other consumers around the world.

“Parents have the right to know that infant nutrition and other dairy products are harmless and safe,” he said in Beijing.

The company was not facing a ban on its products in China, only restrictions on whey protein concentrate, he said.

China relies on New Zealand for almost all its imports of milk powder, although this is an area that Irish firms have worked to develop.

Food safety, especially in infant nutrition, has been extremely high profile in China since September 2008, when six children died and 294,000 were sickened from drinking domestic infant milk formula contaminated with the chemical melamine.

Nearly 52,000 more were hospitalised.

Imported food products, especially infant formula, are highly valued in China – the government has imposed restrictions on the amount of formula brought in, so popular is formula from overseas.

More than 70 per cent of Chinese mothers rely on baby formula rather than breast milk and foreign brands account for about half of total sales.

Major supplier
While Fonterra is a major supplier of bulk milk powder products used in infant formula in China, it has steered clear of the branded space after Chinese dairy company Sanlu, in which it had held a large stake, was found to have added melamine to bulk up formulas in 2008.

Irish dairy has a strong reputation and food companies from Ireland are active in the infant formula market in China.

Dairygold is the leading supplier to the Chinese market of demineralised whey, a key ingredient of infant formula. Last October, Kerry signed a partnership deal with China’s leading domestic baby formula brand, Beingmate, to supply dairy ingredients for the infant nutrition sector.

Since 2008 Glanbia has had a premix manufacturing facility in Suzhou where it manufactures a range of vitamins, minerals, and other nutraceuticals for infant formula.