29 Aug 2013

Fonterra false alarm costs formula exporters $20m

7:47 pm on 29 August 2013

Up to 20 New Zealand infant formula exporters have lost at least $1 million each as a result of Fonterra's botulism scare.

The fallout from the false alarm is continuing, despite the Ministry for Primary Industries announcing on Wednesday further tests it commissioned showed the bacterium present in whey protein concentrate was a benign form of clostridium that does not cause botulism.

Whey protein is used in the manufacture of a range of food products, including infant formula.

The New Zealand Infant Formula Exporters Association says between 15 and 20 small to medium sized businesses have lost $1 million each thanks to what turned out to be a false alarm.

Chair Michael Barnett says as well as the monetary loss to exporters whose stock has been locked down, their reputation has also suffered through their association with New Zealand.

However, he says Fonterra was right to alert the Government and the market. He says the fact it was a false alarm is something for the company to look into but the fact "the flag went up" is a very good thing.

Carrickmore managing director Chris Claridge says his orders have dropped by about a third and he estimates his company will lose at least $1 million.

And a larger company, GMP Pharmaceuticals, which is a contract manufacturer for infant formula, says it has halved production shifts and laid off 25 temporary workers at its East Tamaki plant.

The company says it has produced 150,000 to 200,000 fewer cans of infant formula in the past three weeks.

Exporters to go to China to "repair damage"

Michael Barnett says he is poised to lead a working group to China to repair the damage done by the scare.

Mr Barnett says he has been in talks with the Government to begin the process of repairing ties with China.

"We need to be in the market no later than 18th September. We've got the testing agencies and the border agencies that need to receive this information - hopefully they will comment positively on it."

Mr Barnett says Chinese authorities will need some time to digest the information before attempts to repair the damage can begin.