Contaminated stock under control, says Fonterra boss

Fonterra chief executive Theo Spierings made his first apology on New Zealand soil over the infant formula contamination scandal yesterday, as it emerged that four batches of potentially contaminated formula had reached Hong Kong and Australia.

The debacle came to light on Saturday when Fonterra went public with news it had found the bacterium clostridium botulinum, which can cause botulism, in three batches of a whey protein concentrate.

The Fonterra chief said sorry to consumers and the New Zealand public at a press conference yesterday, saying all contaminated stock had been contained.

Over the past few days Fonterra, regulatory authorities and Fonterra's eight customers have located and secured products that were not in the market and, where they had already reached retail shelves, initiated recalls, he said.

Mr Spierings made his comments after returning from a trip to China, and said after talks with Chinese authorities he was satisfied the situation there was stable.

All contaminated stock had been contained and there was now "little or no risk" for consumers, he said.

Four batches of potentially contaminated infant formula have reached Hong Kong and Australia, the Ministry for Primary Industries confirmed yesterday.

Ministry acting director-general Scott Gallacher said two batches sent to Australia had been contained in a warehouse, while another two were released for distribution in Hong Kong.

Mr Gallacher said a product recall had been issued and the ministry was working with representatives in Hong Kong.

Australian authorities had identified all potentially contaminated products that had entered from New Zealand, he said.

The contaminated whey protein concentrate from one plant was used to make 900 tonnes of product, he said. All unsold potentially contaminated infant formula had been secured in warehouses, aside from the products that had been recalled by product maker Nutricia.

Questions were asked in Parliament yesterday about the length of time taken by Fonterra to tell the Government about the contamination.

Fonterra had suspected the contamination since March this year and had done testing, but did not let the Ministry for Primary Industries know until August 2, two days after the testing confirmed the contamination.

Massey University researcher and marketing specialist Associate Professor Henry Chung said the Fonterra scandal could be a golden opportunity for the Chinese Government to bolster the country's local manufacturers.

New Zealand's dairy products had long enjoyed a premium market position in China, and the country's growing middle class had been happy to pay the price for what it considered quality products, he said. But he warned Fonterra was now in danger of losing its premium status.

"There is plenty of evidence to show that Chinese consumers are demanding higher quality products all the time."

Meanwhile, Fonterra said yesterday it had been fined $900,000 following the conclusion of a review by Chinese authorities into the pricing of dairy products in the people's republic.

The review was undertaken by China's National Development and Reform Commission (NDRC). Fonterra said it had co-operated "fully and openly" with the NDRC throughout the process.

"We accept the NDRC's findings and we believe the investigation leaves us with a much clearer understanding of expectations around implementing pricing policies which is useful as we progress our future business plans," Kelvin Wickham, president of Fonterra Greater China and India, said.