New Zealands reputation as global dairy leader has taken battering in recent weeks

New Zealand's reputation as global dairy leader has taken battering in recent weeks

This column again brings news of New Zealand's dairy industry under the spotlight about concerns over product safety.

Fonterra, New Zealand's largest company never mind dairy processor, has faced a fortnight of questions and scrutiny after the botulism contamination scare that prompted recalls across Asia and import bans against the company. More of the latest on that later.

Today, there came more negative headlines for the sector. The New Zealand government announced it had withdrawn the export certificates for four consignments of lactoferrin headed for China that contained nitrates above permitted levels.

The consignments, made by New Zealand co-op Westland Milk Products, were derived from two batches of lactoferrin - one Westland exported directly to China for use as an ingredient in dairy products; the other supplied to New Zealand firm Tatua Co-operative Dairy Company and also shipped to China. The New Zealand government said some of the protein had made in into consumer products but those lines had been "detained in the supply chain".

"Any food safety risk to Chinese consumers is negligible because the quantities of lactoferrin used in consumer products was very small, meaning the nitrate levels in those products would easily be within acceptable levels," Scott Gallacher, acting director-general for New Zealand's Ministry for Primary Industries said.

China has reportedly halted all imports of lactoferrin from Westland and asked other New Zealand companies to provide test reports on nitrates.

The news is the latest blow to New Zealand's reputation as a global supplier of dairy products. New Zealand has been dubbed the "Saudi Arabia of milk" and the importance of the sector is underlined by the fact Fonterra accounts for a quarter of the country's exports.

Today, the New Zealand government announced details of a ministerial inquiry into the botulism scare at Fonterra, which has prompted questions about the company's production, safety controls and the length of time it took from when the whey protein was manufactured (May 2012) to when it announced a problem (the start of this month).

The company itself is running two investigations into the contamination and last week said two unnamed "senior managers" had been placed on leave.

That news came 48 hours after Fonterra said the head of its domestic milk products had resigned. The company made no comment on whether Gary Romano had stepped down as a direct result of the scare but he is the first senior executive to have left the business.

And, while Belarus and Kazakhstan joined Russia in placing bans on Fonterra imports, the company last week faced issues in Sri Lanka, a significant market for the business, this time over agricultural chemical DCD.

Sri Lanka ordered the New Zealand dairy giant to pull products for allegedly containing traces of DCD, although Fonterra disputed the results.

The recall came seven months after concerns emerged in New Zealand about the presence of DCD in dairy products. The chemical had been used to prevent nitrogen leaching in soil and Fonterra had to move to reassure customers and the wider public after the chemical was found in some dairy products.

Fonterra CEO Theo Spierings, who has faced calls to step down as the company grapples with the fall-out of the botulism scare, insisted the products tested in Sri Lanka were free of DCD. "I think it's very, very strange and unfair," he said.

It is a tough time for the world's largest dairy exporter.