Inquiries begin into contamination scare

10:32 pm on 7 August 2013

Fonterra says investigations have begun into what led to the company's contamination scare.

The dairy co-operative announced on Saturday that 38 tonnes of its whey protein used by other manufacturers, including the baby formula manufacturer Nutricia, was contaminated with a bacterium that can cause botulism.

The whey protein was tainted by a dirty pipe at one of the company's processing plants in Waikato in May 2012. Testing in March this year indicated a problem and the whey tested positive for clostridium botulinum on 31 July. Fonterra didn't tell the Ministry for Primary Industries until 2 August.

Theo Spierings, centre, said basic human error and a "temporary situation" is to blame for the contamination.

Theo Spierings, centre, said basic human error and a "temporary situation" is to blame for the contamination. Photo: RNZ

At a news conference in Auckland on Wednesday, Fonterra chief executive Theo Spierings said all of the contaminated product has now either been recalled, contained by its customers or deemed safe. He said there is little or no risk to any consumers.

Mr Spierings said basic human error and a "temporary situation" is to blame for the contamination at its Hautapu plant in Waikato and the investigations would be overseen by external authorities, including the Ministry for Primary Industries.

"Where you operate multiple factories and you have thousands of people, human errors do happen. For me, at least, I do not know why it happened.

"We have an increased testing regime at this moment until we have gone through this phase of the investigation and corrective actions. We want to be 200 percent sure on what's going out from New Zealand to markets."

He acknowledged that when Fonterra announced the contamination, it did not have all of the information at the time and apologised for the anxiety and discomfort caused to the public.

Mr Spierings travelled to China last weekend where he also apologised to customers. He said he has spoken to local authorities and the situation in the market is stable.

China has issued a temporary suspension on whey protein and base-powders containing whey products. Mr Spierings said it is a key market and admitted Fonterra's reputation has been affected in the short term, but expects it to be restored as a result of action taken.

Mr Spierings refused to answer questions about whether he should resign, saying that is up to Fonterra's board to decide. He also wouldn't be drawn on whether staff would lose their jobs, saying those decisions will be made once the investigations are completed.

Economic Development Minister Steven Joyce said earlier on Wednesday a lack of clear communication about which products were contaminated and which were being recalled added to the confusion and led to ministers losing confidence in Fonterra.

Finance Minister Bill English says the contamination scare would have to be effectively managed to maintain good prices for the country's dairy exports. Global dairy prices eased back overnight in the first auction since the scare. The average price fell 2.4% to just under US4850 a tonne.

Ministry advises caution over baby formula

The Ministry for Primary Industries said on Wednesday it still can't rule out the possibility of babies being made ill by consuming contaminated infant formula.

However, it says it has confidence that all contaminated products in New Zealand have been identified, either by MPI or formula manufacturer Nutricia.

At a news conference on Wednesday afternoon, MPI acting director-general Scott Gallacher said work is continuing to combat the risks.

"The health and wellbeing of babies and all consumers is our top priority. We have a level of confidence around the products. Our advice remains: people do not consume any of the recalled products they may have purchased."