New Zealand's reputation as a first-class dairy producer has taken another hit with Hokitika-based Westland Milk Products saying a small amount of lactoferrin powder had been quarantined in China after tests there showed it contained higher-than-permissible nitrate levels.
Lactoferrin is a protein used in a wide range of products, from infant formula to yoghurt.
Nitrates, which occur naturally in the environment, are used as a food preservative but have been linked to cancer.
Westland Milk chief executive Rod Quin said the co-operative was of the view that the elevated nitrate levels were the result of an isolated incident in the lactoferrin plant only, where traces of cleaning products - which contained nitrates - were not adequately flushed from the plant.
"Our investigation is under way to establish the root cause and we have implemented corrective actions," he said, adding the raised nitrate levels did not constitute a food safety risk.
A Westland Milk spokesman said the co-operative's "best information" was that the product did not reach shop shelves. He said the higher nitrate levels did not show up in local testing but came to light when one of its customers in China conducted an individual batch test.
The Westland announcement follows news early this month that China had temporarily suspended imports of whey powder from Fonterra after three batches were found to contain clostridium, a bacteria that can cause botulism.
Westpac economist Nathan Penny said the incident, which follows the February DCD scare and the 2008 melamine scandal in China, would put another dent in New Zealand's dairy product reputation.
"With this one, it's more damage to the [New Zealand and Westland] brand more than anything, which will be a long-run thing," Penny said.
"It will be another chip away at the local industry's reputation, which will be a long-term issue for the dairy export sector and for the economy in general."
Westland Milk said it had reported to the Ministry for Primary Industries that two batches of lactoferrin, totalling 390kg, showed nitrate levels of 610 and 2198 parts per million respectively, compared with the New Zealand limit of 150 parts per million. All 390kg went to China.
Quin said the fact Westland had acted quickly would be seen as a positive in China. "Obviously, in the context of what is happening with the Fonterra issue, it's not helpful at all and certainly we do not want to be putting our name up in lights at the moment." As a co-operative, Westland is second in size to Fonterra, and is one of NZ's top 100 businesses with turnover of more than $530 million. It last month launched its "Westpro" nutrition range in China, which it said at the time was well received.
The ministry said it had revoked export certificates for four consignments of lactoferrin made by Westland after the increased nitrate levels were detected. One batch was sent directly to China as an ingredient for other dairy products by Westland, and the second batch was supplied to Tatua Co-operative Dairy, and also exported to China, the ministry said.
"Almost all of these products are now confirmed as detained in the supply chain." There was no affected lactoferrin used in products in New Zealand, the ministry said. "MPI's technical experts have looked closely at this issue and believe any food safety risk to Chinese consumers is negligible because the quantities of lactoferrin used in consumer products was very small."