Formula scare: Key prepared to head to China

Prime Minister John Key says he is prepared to fly to China if he needs to in the wake of the Fonterra whey contamination scandal.

Foreign Minister Murray McCully, and possibly Trade Minister Tim Groser, will visit China in a few weeks, Mr Key said today.

"If it's required I would also go.''

His comments come as it emerged a ship carrying a batch of infant formula was intercepted overnight in the Tasman Sea, to make sure the product it carried did not make it onto shelves.

Chinese food regulators will be visiting New Zealand following the recent meat registration problem and the infant formula contamination would also be discussed, Mr Key said.

"I had already agreed to meet them anyway,'' he said.

"There will be ongoing dialogue and discussion between myself at a prime ministerial level and regulators in China over time.''

Trade

Mr Groser said he expected China to place wider import restrictions on New Zealand products.

Only China so far had placed restrictions on the import of whey protein concentrate and he had now been reassured that Russia was not blocking New Zealand imports.

It was initially believed that Russia had banned all dairy products out of concern about infant formula tainted with botulism.

Mr Groser said China had blocked only whey protein powder and no other dairy products, but he expected that to change.

"So far, [there has been] very limited action. But this is likely to change, and it would change in the direction of wider, not narrower.''

He added: "I don't want to convey the impression that we're in a comfortable position because I think that's the wrong conclusion.''

He could not say what China's restrictions had cost New Zealand so far, but said that exports of whey protein powder to China were worth $97 million a year.

Mr Groser said the priority at the moment was on public safety.

But he also emphasised that the real issue was the long-term repercussions on New Zealand's trade reputation.

"In 100 years or more New Zealand's been putting safe food on tables all over the world, and I think you've got to look at that record. Yes, we will recover from this, but we'll have to take some learnings from this and there's got to be some tough questions asked in quarters.

Overnight, a ship carrying a batch of infant formula was intercepted in the Tasman Sea, to make sure the product did not make it onto shelves.

Health authorities in Saudi Arabia, Vietnam and Malaysia were also considering whether to take action on New Zealand infant formula, Mr Groser said.

Impact on the economy

Finance Minister Bill English said that on the events he had seen so far, he was not expecting a significant slow-down in the economy as a result of the Fonterra food safety scare.

"The critical thing to avoid any wider slow-down through - say, a reduction in the dairy pay-out - is to manage this situation in a way that reaffirms New Zealand's brand as a trusted operator, including when things go wrong,'' he said today.

He had asked Treasury to produce some figures around possible product-ban scenarios and he would have more to say about that in Question Time this afternoon.

"No one can really put a number on any long term reputational effect. What we know is if it is managed well over the next week or so, that will have quite a lot less impact than if is it managed badly.

"The big focus right now is getting the information out to our markets as quickly as possible to demonstrate that we are trustworthy regulators of food safety and that will go a long way to protecting the value of the New Zealand brand,'' he said.

It emerged at the weekend that a bacteria that can lead to botulism was found last year in a whey ingredients produced at Hautapu factory in the Waikato which is used in some products including some baby milk formulas.

Asked if the latest scare would force a rethink of the model, Mr English said Fonterra had been a successful entity.

"I think they and the broader public now understand that if you've got one large company that has a significant impact on the economy that it needs to operate to very high standards. They are well aware of that.''

Mr English, a Southland farmer himself, said Fonterra shareholders were asking questions of the company about the testing regime.

"They assume the whole system works to ensure that consumer can trust the product. You can be sure that whatever pressure the Government or the public are putting on the company for answers, the shareholders will be putting on more pressure.''

- NZ Herald

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