New Zealand Prime Minister John Key AP File Photo
WELLINGTON – New Zealand Prime Minister John Key on Monday accused dairy giant Fonterra of delaying sounding the alarm over products tainted with a potentially fatal bug, as investors sent the company’s shares tumbling.
Fonterra revealed on Saturday that a whey product used to make infant formula and sports drinks had been contaminated with a bacteria that can cause botulism.
The announcement prompted immediate action from China, a major market for New Zealand’s dairy products, which ordered recalls of some potentially-tainted products and demanded affected importers check their sales records.
Key said he was concerned at the impact on farm-reliant New Zealand’s reputation as a supplier of “clean, green” dairy products, particularly in Asia, where its infant formula has long been regarded as gold standard.
Key said that tests last year showed there were problems with three batches of whey, adding it was difficult to understand why Fonterra did not act immediately.
“I’m a bit staggered that in May of 2012, when this whey was produced, that it (Fonterra) did show something in its testing, but clearly not something that was of concern to the company because they allowed it to go out,” he told Radio New Zealand.
“You would have thought that for a business where its top business is essentially based around consumer confidence, food safety and the quality of its products, that they are risks that you wouldn’t take.”
Fonterra has not yet responded to the claim.
Key said the government had a team of more than 60 personnel working to contain the fallout from the contamination and would eventually seek a “forensic” examination of how Fonterra had handled the crisis.
Chris Galloway, a senior lecturer in public relations at Massey University, said there were concerns Fonterra had not learned the lessons of a 2008 scandal when six children died and more than 300,000 fell ill after one if its part-owned Chinese partners illegally laced milk with the chemical melamine.
“The repetition makes it harder for people to accept that this is an isolated incident,” he told AFP.
The Fonterra Shareholders’ Fund fell 8.7 percent at the open on the New Zealand stock exchange as investors had their first chance to react to the scare, later recovering slightly to be down 5.9 percent at NZ$6.70 around midday.
The countries that the contaminated whey was exported to include Australia, China, Malaysia, Saudi Arabia, Thailand and Vietnam.