However, it did recommend a much stronger system for product traceability, recall and contingency planning.
As the scare unfolded, frantic efforts to recall infant formula thought to contain tainted whey protein concentrate saw product worth millions pulled from supermarket shelves in New Zealand and overseas, particularly China. It later emerged that some information about which products were affected was inaccurate.
But Primary Industries Minister Nathan Guy said the central finding that New Zealand's dairy food safety regulations were sound was of "fundamental importance to reassure our offshore markets".
"It sends a strong message to our international and domestic consumers that our dairy food produced here in New Zealand is safe and that we have a world-leading structure and system."
The Government had accepted in principle all 29 recommendations and would invest up to $12 million a year implementing them.
He said the report had been seen and welcomed by officials in China, which was now New Zealand's largest market for dairy products. He indicated much of the Government response, including increasing the number New Zealand officials with food safety expertise in China, was aimed at avoiding future incidents or mitigating their impact on that key market.
The report would "go down very well and open up some markets which have some small restriction still in place" as a result of the scare.
The inquiry's next stage, examining details of the incident, would be released after a Ministry for Primary Industries compliance investigation was completed.
Prime Minister John Key will lead a delegation to China to present the final reports next year.
First steps
Key recommendations to improve food safety:
• Strengthening capability in emerging export markets, particularly China.
• Establishing a centre of food safety science and research.
• Increasing dairy processing and regulatory capability.
• Establishing a food safety and assurance advisory council to provide high-level independent advice and risk analysis.
• Fast-tracking work to consolidate and simplify legislation and regulations.
Milk firms ask for China action
The recommendations and findings included in the first stage of the Government's inquiry into the Fonterra botulism botch-up make sense, but they won't improve the difficult trading conditions facing Kiwi infant formula brands in the Chinese market, says an exporters' group.
Chris Claridge, the New Zealand Infant Formula Exporters Association's chief administration officer, said members had been losing $1 million to $2 million in weekly sales in China for four months as a result of the food safety scare and job losses were taking place at baby formula manufacturing and canning facilities.
The report found the botulism scare was not the result of any failure in this country's regulatory system, but Claridge said that confirmed what the association had believed all along. "There was a failure of managing the situation and our members were the collateral damage," he said. "We've looked at the report and our question is: will this help us regain (retail) shelf space in China? The answer is no."
Claridge said the findings of the report needed to be communicated to Chinese consumers, many of whom were still unaware the scare had been a false alarm.
"That can be rectified if we have New Zealand ministers, and the Prime Minister, in China reiterating the point that New Zealand infant formula is safe."
Marco Marinkovich, founder of KiwiMilk Nutrition, who said his firm's sales in China were down almost 50 per cent, called the Government's commitment to add four China-based staff insufficient. "We've got to start again."
Guy Wills, general manager of manufacturer New Image Group, said the report provided a "road map for the industry's future".
"We believe strong foundations for the future of New Zealand's dairy and food sectors are emerging."
