Fonterra makes $8m donation

01:43, Jan 31 2009

Fonterra has made partial amends for its role in the melamine-in-milk scandal by giving $8.4 million to a charitable foundation set up by former Chinese leader Deng Xiaoping.

The dairy co-op has established a charity project - the Fonterra Rural Maternity and Infant Healthcare Community Programme - with China's Soong Ching Ling Foundation. More than 50,000 Chinese infants have been affected by milk tainted with melamine, an industrial chemical. SanLu - a Chinese dairy company 43 per cent owned by Fonterra - was at the centre of the scandal.

An affected Chinese family has filed a suit against SanLu seeking $30,000, the Wall Street Journal has reported. The suit has yet to be accepted by the court system, but if it is, there are likely to be many more.

From Beijing, Fonterra chief executive Andrew Ferrier said it was staff in China who came up with the donation idea.

Asked if $8.4 million was enough, he said: "That's an amount which is going to create an enormous amount of goodwill and good work."

The programme, to operate under the umbrella of the foundation, will build maternal and infant community hubs in rural and underdeveloped areas. It will include exchange and teaching schemes for health workers, obstetrical and paediatric doctors and nurses.



The foundation aims to enhance friendships between countries and promote reunification of China and Taiwan. Madame Soong Ching Ling was the wife of Chinese nationalist Sun Yat-sen and was the first non-royal woman to become China's head of state.

In support of Fonterra's donation, the co-op's shareholders and staff can also personally contribute. Co-op members own about 10,000 dairy farms. The $8.4 million amounts to about $840 per farm.

Asked if farmers were likely to contribute more, Fonterra Shareholders Council chairman Blue Read said: "There's no doubt that farmers have been affected by this. They've taken it fairly personally. Whether they choose to do their own thing is entirely up to them."

The future of SanLu is still in doubt. Fonterra has said that it is finished as a brand but that it is discussing with the Chinese Government how to reconstruct the company's assets.

Mr Ferrier said: "I wouldn't expect anything is going to get solved in the immediate term."

The feedback he was getting from both government and business contacts in China was that Fonterra was seen to have acted with integrity, he said.

A Chinese media research company's survey of 900 consumers has found that only 3 per cent felt worse about New Zealand because of the scandal. "But most consumers do not know that a New Zealand company is SanLu's partner."

The Dominion Post