Another milk powder scare in Asia has once again forced Fonterra to defend its brand name.
The company today said two batches of Anchor-branded milk powder had been recalled in the past week under orders from the Sri Lankan Government after reports it may have contained traces of the toxic agricultural dicyandiamide (DCD).
"We have been asked by the Ministry of Health to recall two batches of product tested by ITI [Sri Lanka's Industrial Technology Institute] last month," said Leon Clement, managing director Fonterra Brands Sri Lanka.
The recalled products, which had been removed from shops, did not contain any DCD, he said.
Independent tests had also showed be tests performed by ITI were also not accurate, he said.
Fonterra was working with the Sri Lankan Government to rectify the situation, he said.
Chief executive Theo Spierings told TVNZ's Q + A today the company was fighting the claims, and was also trying to deal with a blanket ban being imposed on dairy brands in the country.
The situation in Sri Lanka is another blow for the dairy giant, which is already under fire after last week's infant formula scare.
Revelations that low levels of DCD had been detected in some milk samples from September last year caused problems for the dairy co-operative earlier this year, with concerns being raised in Taiwan and China.
Mr Spierings told Q + A the Anchor brand had been a strong-hold in the Sri Lankan market for the past 50 years and restoring its reputation was of the upmost importance.
"Anchor is entrenched [in Sri Lanka]," Mr Spierings said.
"[It] is better known than Coca Cola."
"If we cannot advertise the Anchor brand for a longer period of time, it's going to affect the brand."
Testing by Fonterra had proved the two batches of milk powder, about 40 tonnes, was free of DCD, Mr Spierings said.
"It's exported DCD-free, it's stamped. I've seen the certificates myself. It's imported, it's on the shelves, so we're fighting it."
When questioned about whether Fonterra's error-ridden record had tarnished the company's reputation and New Zealand's image in overseas markets, Mr Spierings insisted consumers had remained loyal.
"Our consumers and our customers are not losing faith," he said.
"In the end, people will see food safety is our first and highest ground."
Prime Minister John Key said a ministerial inquiry into Fonterra's infant formula scare would be carried out.
While he was unable to reveal specific details about the inquiry, he told Q + A today more details were likely to be available tomorrow.
"It's frustrating because Fonterra is the poster child for New Zealand's exporting. They've got a lot of soul searching to go through," he said.
Fonterra is also performing two internal investigations into the incident in which a dirty pipe caused fears of potential bacterial contamination of tonnes of whey.
NZ milk in Sri Lanka:
* 98 per cent of New Zealand's exports to Sri Lanka are dairy products
* Sri Lanka is New Zealand's fifth-largest market for milk powder
* Fonterra has exported products to the country for over three decades
Source: New Zealand Trade and Enterprise