Fonterra's delayed disclosure at issue
W aikato agribusiness professor Jacqueline Rowarth says salt will kill you before DCD does.
DCD is the agriculture chemical dicyandiamide (try saying that aloud and really scare yourself), residues of which were found by Fonterra during sample testing of its dairy products in September last year.
Rowarth may be right.
But despite her view and the prime minister and Fonterra chief executive Theo Spierings decrying the trade risk from the ensuing public fuss that has broken out since last week's orchestrated official announcement some four months after the discovery, Fonterra's disclosure rep is taking another beating.
Just four years on from the baby melamine poisoning scandal in China, in which Fonterra had major exposure though its 43 per cent shareholding in the SanLu company at the centre of the tragedy, we have New Zealand's biggest company again involved in a debate involving food safety and a disclosure gap that niggles.
DCD has been used by some Kiwi farmers for seven years as a farmland treatment, and melamine was added to Chinese-farmed raw milk by Chinese crooks trying to lift protein readings for a higher price from Chinese dairy companies. Neither action is directly Fonterra's fault.
But the common denominator is the time lapse between discovery and announcement, and the orchestrated presentation of the facts. Both cases saw the Government at the forefront.
In the DCD case, smack in the middle of the September DCD residue discovery and last week's announcement was an IPO, which on November 30 saw overseas and local investors snap up $525 million of units in Fonterra's farmer-owned shares.
And, as happened in the SanLu scandal, Fonterra, normally masterful at spin and littered with highly-paid quick thinkers, has come out claiming surprise and dismay when suspicion and questions surface. As with SanLu, the company has been slow to front up publicly.
Peppered with questions yesterday, a public relations spokesman told Fairfax the DCD issue was not delayed until after the IPO to his knowledge.
He said if there had been any risk of a food safety issue with the DCD residue discovery, the company would have had to declare it, because "it could have been material".
He rejected the observation that Fonterra had been tardy in its disclosure around both the melamine and DCD discoveries.
Fonterra "had nothing to talk about" with DCD issue, he said.
The tests for DCD made by Fonterra in September were the first ever the company had done.
The decision to test was for two reasons, the spokesman said.
New Zealand fertiliser companies were asking Fonterra to actively support use of DCD products as a way of reducing nitrate leaching. Second, the United States Government had published details of new tests for a range of compounds, including DCD, which might be used to artificially boost protein levels in food. So Fonterra tested and found DCD residues "100 times less than European daily allowances", the spokesman said.
This is why Fonterra said nothing in September, he said.
The company figured that, with no international standard for DCD residues in food, there was nevertheless a trade risk, and international standards were needed. Fonterra decided to "take the lead" and sit down with agriculture ministry officials and fertiliser companies to nut out the issue, he said. It's up to the market to digest that explanation - maybe with a grain of salt.
- © Fairfax NZ News
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