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Home / Business

Liam Dann: Plenty of practice with dairy safety issues

Liam Dann
By Liam Dann
Business Editor at Large·NZ Herald·
15 Mar, 2015 04:00 PM6 mins to read

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With the threat made by some nasty individual to poison baby formula with 1080, it certainly seems like Government and industry efforts have been much better co-ordinated. Photo / Nick Reed

With the threat made by some nasty individual to poison baby formula with 1080, it certainly seems like Government and industry efforts have been much better co-ordinated. Photo / Nick Reed

Liam Dann
Opinion by Liam Dann
Liam Dann, Business Editor at Large for New Zealand’s Herald, works as a writer, columnist, radio commentator and as a presenter and producer of videos and podcasts.
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This time, with the threat made by some nasty individual to poison baby formula with 1080, it certainly seems like Government and industry efforts have been much better co-ordinated.

Both the Government and the dairy industry got a lot of things right in this latest food safety crisis.

Of course, you'd hope they had learned a few things - especially in relation to China. They have had plenty of practice in the past few years - melamine, DCD, botulism and now 1080. It would all make for very grim reading, except for the fact that of the three issues we've dealt with in this country none actually presented a threat to safety.

The Sanlu, melamine scandal, in which New Zealand involvement was via Fonterra's passive joint venture stake, was a terrible lesson in just how crucial food safety is for producers of infant food.

We should never forget that lesson and must always be guided by a focus on the safety of infants above all economic considerations. I'm pretty sure no one at Fonterra ever will.

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The difference between a food safety issue that takes lives and one that doesn't is immeasurable.

But the issues we've had to handle from New Zealand have for various reasons remained theoretical to this point.

This time, with the threat made by some nasty individual to poison baby formula with 1080, it certainly seems like Government and industry efforts have been much better co-ordinated.

The handling of these issues hasn't been short of scrutiny - but given the high stakes, that is the way it should be. In early 2013 officials underplayed the reputational risk in China when DCD traces were detected in New Zealand milk powder. The science was clear that the levels were safe - but that didn't stop the issue getting a lot of attention in China.

In fact the way that issue was handled played into Chinese consumer fears of a cover-up.

Later that year the Fonterra botulism scare appeared initially even more serious.

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Hospitals were briefed, product was pulled and parents here and in China were justifiably worried.

In that case officials escalated the issue quickly, Fonterra chief Theo Spiering headed off to China where he did a good job of quelling fears. But an average PR performance domestically created a media storm which threatened to overwhelm official efforts in China.

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Still, a crisis for the industry was narrowly averted - even before it became clear there should never have been a crisis in the first place.

This time, with the threat made by some nasty individual to poison baby formula with 1080, it certainly seems like Government and industry efforts have been much better co-ordinated.

In fact given the improbability of the threat ever being enacted some - particularly the small independent infant formula producers most exposed to the regulatory risk - have questioned whether the Government overdid it.

Should they have gone public at all?

But of course they had to.

Putting aside the right of parents to know, the risk of this coming out in an uncontrolled fashion and doing far more damage in key export markets was high.

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Amazingly there were up to 1000 people in the loop on this issue over a period of three months before it went public. And in the end, despite all the the planning they had to move quickly as the story started to leak.

In that respect the Government and Fonterra got lucky. They managed to keep this issue under wraps until they could front it on their own terms - but only just.

The Herald had an anonymous email tip a week before the announcement. It was only partly accurate - it implied a real contamination was being covered up by Fonterra.

Fonterra dodged our inquiries by insisting, on the record, that it was not dealing with any contamination issue within the company. Whether it was disingenuous in its response is now a moot point.

They were dealing with an issue - it was a potential issue. But whatever.

Putting aside the right of parents to know, the risk of this coming out in an uncontrolled fashion and doing far more damage in key export markets was high.

In the context of child safety and national economic security Fonterra's response was reasonable but shows how close to the wire things were getting.

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It sounds like other media had started asking similar questions.

If the 1080 story had been broken by media in a manner which suggested any kind of cover-up then the Chinese public's reaction could have been considerably more negative.

As it stands, the heavyweight manner in which this issue was announced really seems to have done the job.

There are no signs of serious economic damage and regulatory fallout appears to be limited although it is causing real headaches for smaller exporters. Anger among those producers is understandable. They copped it in the wake of the botulism scare and they are copping it again. They were the last in the industry to know and only found out after inquiries were made.

The kind of regulatory hurdles that have stalled millions of dollars worth of product at Chinese ports are non-material to a company Fonterra's size. To smaller players they create cashflow nightmares and can potentially put the business in jeopardy.

The independent producers have argued that their concerns were not considered in the plan to frontfoot this issue. To be blunt though, they were. They were just ignored.

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In the grand scheme of things the Government appears to have put child safety first, Fonterra and its customers second and reputational damage in China third.

Smaller independent producers have run a distant fourth.

If there was any other way to approach the issue it doesn't seem obvious. But presumably there will be more lessons learned from this latest food safety crisis.

Let's hope so because it is clear that these issues are not going to go away.

As long as this country is so reliant on food exports we are going to be vulnerable.

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