21 Jun 2018

Fonterra denies food safety issue for Chinese partner

3:49 pm on 21 June 2018

Dairy giant Fonterra insists a new controversy involving partner company Beingmate is not an issue of food safety.

Fonterra has bought a stake in Beingmate Baby and Child Food Company for about $754 million.

Fonterra bought a stake in Beingmate Baby and Child Food Company for about $754 million in 2015. Photo: AFP

The problem stemmed from a mismatch between the labelling and the content of a container of infant formula manufactured by the Chinese giant Beingmate.

Fonterra said the matter did not concern the New Zealand dairy company, but has issued a statement as it owns almost a fifth of Beingmate's equity.

The problem arose when The Spinoff website quoted several Chinese media organisations that said Beingmate was among a number of infant formula firms found to have breached manufacturing rules.

They said one of the ingredients of the formula was inconsistent with its licence.

In a statement, Fonterra said there were no safety issues involved in the Chinese reports.

"This is not a food safety issue. No product was recalled or removed from shelves and no warning was issued to consumers by Chinese authorities," the statement said.

"The audits carried out by the FDA (the Chinese regulator) are regular and mandatory for all infant formula manufacturers in China, including Beingmate, with approximately 100 audits already completed.

"The breach relates to a technical issue caused by the ingredient standard listed on the ... packaging label from Beingmate's supplier being different to the standard noted in Beingmate's own documentation.

"The FDA publicly stated that no unsafe product was found in the National Supervision Program and all necessary corrective action was taken by Beingmate."

Fonterra was reluctant to comment further.

The issue follows other issues with Chinese dairy manufacturing.

In March, Fonterra recorded a half year loss of $348 million compared with a profit of $413m a year earlier.

The main reason was a write-down of $405m in the value of its stake in Beingmate.

Fonterra also had to pay $183m in damages to the French dairy company Danone for losses caused by the botulism scare of 2013.

That turned out later to have been a false alarm.

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