Authorities have recalled up to 1000 tonnes of dairy products across this country and seven others after Fonterra announced tests had found a bacterium that could cause botulism.
The Ministry of Primary Industries said the tainted products included infant formula, sports drinks, protein drinks and other beverages. Countries affected beside New Zealand included China, Australia, Thailand, Malaysia, Vietnam and Saudi Arabia.
The botulism bacteria scare is likely to cause "sheer, absolute panic" in China as the news filters through the world's second biggest economy, says a Kiwi involved in the dairy trade.
Gregg Wycherley, managing director of Auckland baby milk brand Fresco Nutrition, said he anticipates "wholesale removal of New Zealand infant formula off Chinese supermarket shelves" by tomorrow morning.
"News of the contamination will just go viral in the Chinese social media," he said.
Weibo, a Chinese social networking website similar to Twitter, was starting to buzz with talk of the potential contamination last night. Many users were pointing out Fonterra's links to Sanlu, one of the companies responsible for China's 2008 melamine scandal, in which at least six babies died and thousands more became sick after consuming dairy products.
Fonterra yesterday announced three batches of a whey protein called WPC80, manufactured in May last year, may have been contaminated by a dirty pipe at the company's Hautapu plant, in the Waikato.
The dairy co-operative said eight of its customers, most of whom have still not been named, may have used the affected batches in a range of products including infant formula and sports drinks.
The Centres for Disease Control describes botulism as a rare but sometimes fatal paralytic illness caused by a nerve toxin.
The Ministry for Primary Industries said five batches of Nutricia Karicare follow-on formula for children six months and over, which was sold in New Zealand, had been manufactured with the affected batches of WPC80.
But none of the batches was thought to be in retail stores.
"Nutricia has advised that three of those batches are in a warehouse in Auckland, one is on a ship, and the other is in storage in Australia," said Scott Gallacher, the ministry's acting director general.
He said parents should use Karicare formula for children aged 0-6 months or an alternative brand until a verification process was completed.
New Zealand's reputation for high-quality food products - the driving force behind some $2 billion in annual dairy exports to China - also took a hit in January when traces of dicyandiamide, a nitrate inhibitor, were found in New Zealand milk.
Fonterra chief executive Theo Spierings was flying from Europe to China yesterday.
China's import authority yesterday ordered an immediate recall of any products containing the affected batches of Fonterra WPC80, the state-run news agency Xinhua said.
Simon Page, managing director of infant formula exporter BioPure Health, said it was a bad look for Fonterra and New Zealand to have two contamination scares in less than eight months.
"Something's not right," he said.
- Additional reporting AP
Formula risk vexes parents
Concerned mum Claire Knight - with daughter Eva, 10 months, at an Auckland supermarket last night - said she was troubled by the Fonterra admissions.
"We want to know as soon as possible about the contamination. In the meantime, we'll come up with something to work around it."
She and her husband Rob bottle-fed Eva twice a week when the little girl was being cared for by her grandparents, she said.