Milk industry in 'damage control'

Players in New Zealand's $14 billion dairy industry are accusing Fonterra, government officials and their own industry body of "a coverup" over the DCD agrichemical issue, claiming their alarmed overseas customers are refusing to accept delivery of export product worth millions of dollars.

Industry sources say that while dairy giant Fonterra is bearing the brunt of the trade reputation risk and blame for not disclosing its September discovery of DCD residue immediately, the Ministry of Primary Industries is complicit in keeping the discovery quiet until last week.

DCD or dicyandiamide has been used by farmers in New Zealand for seven years to reduce nitrate leaching and greenhouse gases.

Industry body the Dairy Companies Association of New Zealand is also under fire from some of its members.

The association, chaired by Fonterra director Malcolm Bailey, was part of a DCD "working party" formed by the ministry in December but did not inform all its members of the issue until this month. Some were not told until the same time as the public, on Thursday last week. Bailey declined to comment.

An industry player said members could "no longer trust our own industry group".

The ministry had a responsibility to the wider dairy industry to inform it of any potential issues, he said.

There was absolutely no food safety risk from DCD but "perception is everything with food", he said.

"New Zealand is already a bit tainted by the melamine thing" in China in 2008.

The DCD residue discovery "was nothing, but because of the delay in disclosing it, it's become something".

"Just a sniff of a coverup or cute [behaviour] and you're gone.

"If we had been told in September, we could have isolated it and dealt with it. It could have been diffused quickly.

"Now they've forced everyone into damage control."

Milk processors, which bought milk from Fonterra as well as from their own farmers, could lose tens of millions of dollars because overseas customers were not accepting product until it was certified safe.

Westland Milk Products has also found DCD traces in its own testing, which it started this week.

Fonterra, New Zealand's biggest company and the world's largest dairy exporter, controls nearly 90 per cent of the country's milk supply. It held a 43 per cent stake in Chinese dairy company SanLu, which was involved in the melamine baby formula poisoning scandal which swept China in 2008.

Fonterra lost its $200 million investment when SanLu subsequently went bankrupt.

Melamine was found to have been widely added to Chinese raw milk supplied to Chinese dairy companies by milk sellers in a bid to artificially raise protein levels for higher returns.

At least six babies died and thousands suffered serious kidney damage.

DCD is not considered by scientists to be a food safety risk but there is no international standard.

Fonterra said the residues it found were 100 times less than generally acceptable in Europe.

Fertiliser firms Ballance and Ravensdown last week announced they were suspending sales of the product. Only about 500 farmers are thought to have applied DCD during the autumn lead-up to Fonterra's discovery. Fairfax NZ

Taranaki Daily News