Fonterra chief executive Theo Spierings defended the company's multimillion-dollar recall of dairy product thought to contain a botulism-causing bacteria, despite it proving to be a false alarm.

The Ministry for Primary Industries said it had received results confirming that the bacteria found in the whey protein concentrate (WPC) manufactured by Fonterra was not the botulism-causing clostridium botulinum.

As it turned out, the organism was confirmed as clostridium sporogenes, which is not capable of producing botulism causing toxins, the ministry said.

Spierings said the cooperative had done the right thing and with the recall and that it would do the same again, if confronted by similar circumstances.


"I believe that we did the right thing and made the right calls all the way through this,'' he told a news conference. "Of course it was not an easy product recall,'' he said.

"For me personally, being a father of three children, I am very relieved with this news,'' he said.

"For us food safety is number one on our agenda and all our systems and all our people acted accordingly,'' he said.

The product in question was whey protein concentrate ingredient, and products made using it, including infant formula.

Additional testing commissioned by MPI of the original samples tested by AgResearch led to Fonterra and MPI initiating the precautionary recall on August 2.

The latest independent research involved a total of 195 tests carried out in both the United States and New Zealand.

Spierings said there was "a sense of shared relief'' that the product was not contaminated.

"The original results from AgResearch indicated the presence of toxin-producing clostridium botulinum in the affected whey protein concentrate and we could therefore not take any chances,'' he said.


Fonterra originally commissioned independent testing from AgResearch, as one of only two research facilities in New Zealand capable of carrying out testing for the bacteria.

"On the basis of the results we received from the AgResearch tests, we had no choice but to alert regulators, and announce a global precautionary recall with our customers,'' Spierings said in a statement.

Despite today's news from MPI, Spierings said the company would still conduct its internal reviews as to what happened.

Spierings acknowledged there had been confusion and anxiety arising from the complexity of the precautionary recall and apologised for it.

"The past few weeks have been very difficult for parents in a number of countries, as well as for our customers, our farmers, and our staff,' he said.

"Given the same circumstances, and with food safety always front of mind, I would do the same again,'' he said.

The news did not affect the various reviews and inquiries underway. We are committed to learning from, and sharing, any findings about how we can improve.

One share broker estimated the initial cost of the recall to be around $15 million.


The MPI confirmed the organism was not capable of producing botulism causing toxins late this afternoon.

"There are no known food safety issues associated with Clostridium sporogenes, although at elevated levels certain strains may be associated with food spoilage,'' it said.

"When MPI received information from Fonterra on August 2 that it had detected Clostridium botulinum in some of its products, I immediately adopted a precautionary approach to protect consumers both here and overseas,'' acting director-general Scott Gallacher said in a statement.

"We needed to act on what we knew at that time. The information we had then said there was a food safety risk to consumers and we moved quickly to address it,'' he said.

At the same time, MPI commissioned a further array of tests to validate the initial results Fonterra reported.

A total of 195 tests using a range of technologies have been conducted in laboratories here and in the USA.

"Results from the most definitive of these tests arrived over night, and were assessed with appropriate technical advice on hand today,'' he said.

The ministry sought additional testing at both local and international laboratories, seeking the "most robust results we could get''.

Scientists used a range of methods - all came back negative for Clostridium botulinum, he said.

MPI said it had informed overseas regulators of these results, and would provide them with a full diagnostic report soon.

Mr Gallacher said testing was done at local and international labs.

He said MPI had today informed overseas regulators of the results.

The Clostidium sporogenes bacteria that was identified did not represent a health risk but was linked to potential food spoilage.

Mr Gallacher said on the back of the results, New Zealand and Fonterra now had a solid and clear platform from which to re-enter overseas markets affected by the scare.

He said the affair showed parents and caregivers could be assured that the NZ Government and regulators would act responsibly and transparently when a potential food safety issue arose.

A failure of hygiene during processing remained a concern for customers incorporating WPC into their products. However, the concern primarily relates to quality and the potential for spoilage when used in foods that support growth of Clostridium sporogenes from spores.


International media have been quick to catch onto the latest revelation in Fonterra's botulism scare saga.

"Fonterra products free of botulism, says New Zealand,'' reported the BBC on the front page of its international news website.

"Botulism ruled out of Fonterra contamination: New Zealand regulators,'' the China Daily reported.

Chinese news website resigned the news to its business pages under the title "Botulism ruled out of Fonterra contamination: New Zealand regulators'' after screaming front page headlines when news of the scandal first broke.

Chinese website People's Daily Online said "China relations good, but Fonterra scare puts New Zealand under scrutiny: minister'' under its foreign affairs section.

"Fonterra milk botulism scare a false alarm, says New Zealand'' The Times of India reported.

American website Voice of America placed the story in its latest world news section under the title "Fonterra Milk Products Didn't Contain Botulism: New Zealand''.


The news that there was no botulism risk from the Fonterra batches of whey would come as a huge relief to consumers around world, as well as to the company and the New Zealand food industry, Food & Grocery Council chief executive Katherine Rich said.

"This is fantastic news. Mum and dad buyers of infant formula around the world will be particularly relieved at this news. There was never a risk to their babies. The food companies involved should be applauded for their decision to do their precautionary recall.

She said while some people would now ask whether the precautionary recalls were a waste of time, the answer was no.

"From a food industry perspective Fonterra did exactly the right thing - they put public safety first,'' she said.

"Fonterra CEO Theo Spierings made the correct and only appropriate call. As other CEOs within the FGC membership would agree, he would have been derelict in his duty as head of a global food company had he not acted so promptly,'' Ms Rich said.

Labour's primary industries spokesman Damien O'Connor called the results a "complete systems failure by the Ministry for Primary Industries''.

'' ... our failure to ensure the highest standards of testing, monitoring and auditing means the damage has been done to New Zealand's international reputation,'' he said.

"This fiasco continues to be a disaster for our clean, green brand. The inability of the ministry's systems means our reputation is always at risk.''

New Zealand Infant Formula Exporters Association chief administrative officer Chris Claridge said it looked forward to resuming trade with China.

It had been dismayed and disturbed with the way the botulism scare was handled initially, with its members losing "millions'' over the scandal.

"I've lost a million dollars worth of trade and I'm a small and medium sized exporter,'' he said.

New Zealand needed a more co-ordinated and coherent approach to food scares.

"Anything that can bring New Zealand's brand into disrepute must be managed very carefully. Anything that can bring New Zealand's brand of feeding infants worldwide into disrepute must be handled with the utmost care and responsibility,'' Mr Claridge said.

That was also the case for news that would cause stress to parents feeding children in New Zealand, he said.

"In this case the unnecessary stress and anxiety to consumer internationally and to my members - I'm dismayed.''

The episode had created an unnecessary dent in the country's reputation.

Primary Industries Minister Nathan Guy said MPI's announcement was good news and the Government was relieved.

The all clear and the tracing report would go a long way to reassure international markets that MPI had done s thorough job.

However, there were still unanswered questions about the scare and how it was handled which was why MPI was continuing with its compliance review and the Government would proceed with its ministerial inquiry.

Economic Development Minister Steven Joyce defended the ministry's reaction to the information it received from Fonterra, saying a precautionary recall of affected products was the right thing to do.

"Nobody would change any of that at all because the reality is there was information that caused Fonterra to approach MPI and say hey we've got a problem here.''

A Nutricia spokeswoman said anyone who could comment was in meetings to discuss today's announcement and it would be able to make a statement tomorrow.

After the contamination fears were announced earlier this month, the company recalled all Karicare Stage 1 new baby and Stage 2 Gold+ follow on formula in the New Zealand market.

The recall was later narrowed to batches manufactured between May 21 and August 2 this year.

Nutricia, a division of French dairy giant Danone, was one of the companies that received 38 tonnes of the whey protein.

Greens co-leader Russel Norman said the announcement created new questions.

"The Ministry for Primary Industries and Fonterra both need to take an extremely hard look at how this fiasco has developed,'' Dr Norman said.

"Why was the bacteria wrongfully identified in the first place? And given that the original test showed Clostridium botulinum, why was it allowed to continue to progress into the infant formula food chain?

"Why was MPI able to test the product for the bacterium in less than a month whereas it took Fonterra three months and it now seems that they came up with an incorrect result''.


Meanwhile, Fonterra announced today it had resumed operations in Sri Lanka after an assessment that there was no risk to Fonterra staff and that the situation had now stabilised.

Last Friday we took the decision to temporarily suspend our Sri Lanka operations to protect our people, and to protect our farmer shareholders' assets,'' Spierings said.

"I am now confident that our people are safe and the business is ready to resume operations and continue selling high quality dairy nutrition to Sri Lankan people.''

An order which had prevented Fonterra from selling its products in Sri Lanka was overturned in the courts there last Friday.

Spierings said Fonterra would continue to work with Sri Lankan and New Zealand government authorities on a long-term sustainable solution to support its Sri Lankan customers, communities and the local dairy sector.

- additional reporting: Adam Bennett