KEY POINTS:
Fonterra says it will be testing milk for "every conceivable poison" in the wake of a Chinese scandal that has left at least four babies dead and tens of thousands ill.
Chief executive Andrew Ferrier yesterday apologised to Chinese parents who bought poisoned baby formula from San Lu,
one of 22 companies involved in the tragedy.
Mr Ferrier said he would think "long and hard" before going into another joint venture like the one with San Lu, which gave Fonterra a 43 per cent stake but not joint control.
"It's made us more suspicious, without question," he said.
The Chinese state council has reported San Lu knew in June its formula was tainted with the industrial chemical melamine - which causes kidney stones and can lead to kidney failure. It did not tell Fonterra until August 2.
Mr Ferrier said that if San Lu was lying about when it knew "they were lying to us too".
"If these allegations prove to be true then frankly I'm appalled that this could go on," he said.
Mr Ferrier and board chairman Henry van der Heyden told a packed press conference they would now test for melamine around the world.
But they were confident Fonterra's milk supplies in other countries were safe. "The sad thing is you can never be absolutely 100 per cent certain against the criminal contamination of your supply chain. But we've learned an incredibly painful lesson through this," said Mr Ferrier.
Mr Ferrier said the scandal had ended San Lu as a brand.
And while Fonterra planned to re-build a business with San Lu's assets, he suggested there would be "material changes" to San Lu's management and governance.
Fonterra's management has been criticised for not going public as soon as it learned of the problem on August 2. The company says by blowing the whistle it would have risked being shut out of the recall process - something it was keen to speed along.
In his first media appearance since news broke of the tragedy, Mr van der Heyden said the board was unanimous that Fonterra had done the right thing.
Mr Ferrier said Fonterra had been assured central government had been told about the problem before the New Zealand Government got involved, something that now appears in doubt. "It could have been that people were fooling us deeper down at the local authority level."
Mr Ferrier said Fonterra had realised the magnitude of the tragedy only in the last couple of weeks.
He admitted Fonterra had had only one Mandarin-speaker within San Lu, and one technician overseeing the company's standards.
San Lu has now been taken over by the Chinese Government.
Mr Ferrier said he did not think Fonterra had been damaged by the scandal.
The dairy co-operative is determined to stay in the lucrative Chinese market.
Asked if Fonterra shareholders wanted to see heads roll, Mr van der Heyden said it was too early to tell.
"The feedback that I've received, and I've had two or three farmer meetings over the last week, I'd say it is a watching brief."