Fonterra caught in China milk powder scandal

Epoch Times | Sep 14, 2008

Fonterra Caught in China Milk Powder Scandal

By Charlotte Cuthbertson
Epoch Times Auckland Staff

New Zealand’s dairy giant Fonterra is caught up in the latest food scandal in China as the contaminated milk powder crisis reveals weeks of delay before the public was informed.

The milk powder, from Sanlu Co., has so far caused the death of two infants and hundreds are ill after the chemical melamine was found in Chinese baby formula.

Fonterra has a 43 percent stake in Sanlu Group and knew about the tainted milk on 2 August, yet a public recall was only initiated six weeks later, on 10 Sept. Sanlu has since been ordered to halt all production. More than 500 infants who had been fed formula from the company have developed kidney stones and two reportedly died.

Melamine is an industrial chemical that can boost the apparent protein content in some standard tests on food.

Fonterra Knew 6 Weeks Ago

Fonterra CEO Andrew Ferrier said at a video conference on Monday that his company knew of the tainted milk on 2 August, “but it would have been irresponsible to just go public without all the facts”.

However, he then said that Fonterra “pushed hard” for a public recall but “with any recall you’ve got to follow the procedures of the local authorities”.

Green Party Health spokesperson Sue Kedgely questioned Fonterra on the six-week delay of going public about the tainted products.

“... Given that babies were being fed this product every day, Fonterra should have gone public as soon as it knew of this serious contamination-regardless of what officials were saying,” she said in a press release.

Prime Minister Helen Clark said Monday that she had stepped in after she found out about the tainted milk on 5 September. Three days later she ordered that senior officials in China be told of the contamination. The full recall began two days after that
Complaints Since March

According to one newspaper report in China, Sanlu had been receiving customer complaints about the milk products causing babies to become ill from as far back as March.

Ferrier said the Chinese Health Ministry was handling the investigations but was unaware of when results from their findings would be produced.

The Chinese vice minister of health, Gao Qiang, said at a news conference on 13 Sept., "This is a severe food safety accident.” Gao was the spokesperson for the health ministry in 2003 when it was revealed communist authorities were covering up the extent of the SARS incident in China.

Fonterra would not be undertaking its own investigations at this point, Ferrier said.

“We’re going by what the Chinese Ministry of Health is saying.”

Farmers Blamed

Ferrier, on a business trip in Singapore, said it had been confirmed to him that the source of contamination was raw milk from farmers.

“Sanlu purchases the raw milk from third parties. It is also my understanding that is had been established that the possibility of contamination in the production [and] storage... process has been excluded.”

However, Chinese websites claim farmers are innocent, as the whole process of producing milk from cows is operated by machinery and they never touch the milk.

Chinese bloggers are questioning how individual farmers could be responsible when 70 tons of product was found contaminated in China and a further 25 tons had been exported to Taiwan.

Fonterra’s Reputation

When asked if he felt Fonterra had lost control of its own product safety Ferrier replied: “First of all, it’s a Sanlu product. We, together with Sanlu, have done everything we could.”

The Epoch Times called the Fonterra office in Taiwan Monday and were told that they were first informed of the contaminated milk by the Taiwanese government on 12 September and had not heard from the Fonterra head office.

Ferrier said the “vast majority” of tainted milk powder had been removed from public circulation in China but could not say all of it was.

Trade minister Phil Goff told NZPA on Sunday that he didn’t think the scandal would damage New Zealand’s trade interests in China.

Green Party co-leader Russel Norman said he was unsure how Fonterra’s reputation would be affected by the scandal.

“We signed up for a free trade agreement with no rules around environment or health, and so we are exposing ourselves and our companies to these types of scandals.”

Ferrier said Fonterra had paid NZ$180 million for its 43 percent stake in Sanlu.

“Fonterra’s reputation is very important in this,” he said.

Chinese Public’s Reaction

Reactions from the Chinese community have been captured in an Internet survey that examined 157,093 responses. 82.9 percent said they were shocked and could not believe Sanlu was so irresponsible for people’s lives; while 78.4 percent said they that would never buy the brand again; 51.7 percent asked for legal justice; and 48.3 percent called for a thorough investigation that prioritized the safety of children.

Other Chinese bloggers and Internet users have expressed outrage at a potential cover-up due to the Olympic Games. One internet article suggested that provincial and local governments knew of the contamination before the Olympics.

One consumer, Ms. Han, is from Gansu Province, where most of the babies cases had been reported.

She told The Epoch Times that it “cannot be forgiven” if someone delays of reporting the information of tainted baby formula because of any political or economical reasons. “It also can’t be understood and accepted even if it is because of the Olympic Games.”

In March last year, in the US, a large number of cats and dogs died from eating pet food from two Chinese manufacturers. It was revealed that melamine was added in some of wheat protein powders and rice protein powders.

New Zealand Products Being Tested

Some milk products on supermarket shelves in New Zealand were sourced from China, Greens’ Ms Kedgely said.

New Zealand Food Safety Authority Deputy CEO Sandra Daly said milk products in New Zealand were being tested for melamine, including coffee whitener and chocolate with a high dairy content. She said infant formula has been prioritised for testing and all results have come back negative.

source: Epoch Times