Buyers shrug off taint worries

International buyers of New Zealand dairy products shrugged off any concerns over contamination this week, as prices at Fonterra's dairy trade auction continued to rise.

The auction was the first since news broke about small traces of DCD, a nitrate inhibitor, being found in some milk powder.

Fonterra, which has stressed there were no food safety concerns involved, took care to tell bidders that the products sold last night were not made at the time of the scare.

On Tuesday night, prices on the auction's GDT-TWI index jumped 2.4 per cent, enhancing the chance of a higher end-of-season payout for farmers.

It was the fourth straight gain this year. The average winning price also rose to US$3598 (NZ$4261) a metric tonne, up from US$3442 a metric tonne.

Whole milk powder, the biggest product by volume, rose 5.4 per cent to US$3468 a tonne, while skim milk powder rose 0.5 per cent to US$3554 a tonne.

Cheddar cheese was the only category to record a slight fall, its price slipping 0.1 per cent to US$3525.

The auction had 135 winning bidders from 212 participants out of a total of 762 qualified bidders. The GDT-TWI index is closely watched by economists because of the importance of dairy exports to New Zealand.

Fertilisers containing DCD have been withdrawn by two major fertiliser manufacturers.

Ross Verry, general manager of agri and business strategy at ANZ, said the trend for dairy prices was in the right direction and production volumes were strong, but weather conditions could still affect the payout.

"Over the last little while, it's certainly got drier but there's also been a bit of rain over the last few days . . . probably the driest parts of the country are not traditional dairying areas anyway."


Meanwhile, Fonterra, under scrutiny for its delayed public disclosure of traces of a chemical in milk product, has renewed the contract of its public relations advisor Baldwin Boyle Group for another five years - with a twist.

The deal will see former Baldwin Boyle managing director Louise Nicholson, embedded in Fonterra’s Princes Street Auckland headquarters for the past year, resign from BBG, to become Fonterra’s director of public affairs,  said spokesman Graeme McMillan, a director of BBG.

Nicholson had also ceased to be a shareholder of BBG, he said.

Fonterra chief executive Theo Spierings would manage communications for Fonterra, New Zealand’s biggest company and the world’s leading dairy exporter, McMillan said.

Nicholson would report to Spierings and communicate Fonterra’s strategic plan to BBG, the “outsource” agency for communications which would execute it, he said.

Nicholson would report to Spierings. BBG’s contract was renewed this month, McMillan said.

Fonterra’s public image, tainted in 2008 by the company’s exposure to China’s baby formula melamine poisoning tragedy, through its 43 per cent stakeholding in the Sanlu dairy company deeply involved in the scandal, has come under scrutiny again in the recent DCD residue scare.

Fonterra in September last year, in its first sample testing in  7 years for residues of a fertiliser by-product designed to cut nitrate leaching into waterways, found “minute” traces of the chemical diacyandimide.

It took four months for Fonterra’s testing results to become public knowledge through the government, two weeks ago.