6 Aug 2013

Govt counts cost of Fonterra ban

10:19 pm on 6 August 2013

Finance Minister Bill English says the goods caught up in the Fonterra ban in China are worth tens of millions of dollars.

China has issued a temporary suspension of the importation of Fonterra whey protein concentrate and dairy base powder due to a botulism contamination scare.

Bill English.

Bill English. Photo: RNZ

Thirty-eight tonnes of whey produced in May 2012 was tainted by a dirty pipe at one of Fonterra's processing plants in Waikato and the Ministry for Primary Industries informed last Friday.

Mr English says in the year to June, exports these two products to China were worth $125 million and only a fraction of that annual amount is caught in the current ban.

In Parliament on Tuesday, the minister was at pains to point out that the goods involved are a small percentage of total dairy exports.

He said there are some long-term risks to New Zealand's reputation but if the situation is managed effectively, the economic impact should be small.

Mr English said there would not be a detailed assessment of the potential economic consequences unless the situation escalates.

Meanwhile, Trade Minister Tim Groser now says Russia has not banned New Zealand milk products, as was earlier thought, but it is concerning that China has banned Fonterra-manufactured products from Australia.

Mr Groser said while he is not aware of "heightened concern" about the ban from Australia, that does not mean they are not worried about it. He said the response from Australia has been "very controlled".