Fonterra getting too big for its gumboots

ANDREA FOX
Last updated 07:28 06/08/2013

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OPINION: Our patience with Fonterra is running out.

The botulism scare is one too many, but being kept in the dark too long for a third time on a food safety issue is simply not good enough.

Nor is it acceptable to refuse to answer - or to take days to respond to - basic questions, answers to which could have saved many a parent a sleepless night worried whether the next can of infant formula they buy could be toxic.

New Zealand's biggest company, created and nurtured by special legislation in 2001, continues to greet the most basic questions with silence.

What is so special about Fonterra that entitles it to this high-handed behaviour?

It's a milk processing company which exports. Yes, it's New Zealand's biggest with revenue nudging $20 billion last year, and it generates around 25 per cent of national export returns. But it owes its nearly 90 per cent dominance of the dairy industry to special legislation.

Former Fonterra chief executive Andrew Ferrier said during the 2008 Sanlu baby milk melamine poisoning scandal in China that a food safety scare was the worst horror he could imagine on his watch.

This year alone Fonterra has had to declare another two. There was the announcement in January this year of the discovery of DCD nitrate inhibitor residues in Fonterra products, and now we have botulism risk.

If there was a "three strikes and you're out" policy in the food industry, Fonterra could be looking at a jail term.

Not because of the contamination issues - food processing and particularly dairy manufacturing on the scale Fonterra performs it allows ample room for human error - though three is too many.

Where Fonterra has overstepped the mark - for the third time - is keeping us in the dark too long about its discoveries. People are scared. They're also angry.

We are told it was five months ago that Fonterra found elevated levels of the botulism-associated toxin Clostridium in tests on whey protein concentrate.

Due to there being hundreds of strains of Clostridium, further testing was done multiple times to find the exact strain.

On July 31 Fonterra told the Government the strain had been confirmed as toxic. Just after midnight on Saturday, August 3, Fonterra issued a public statement about the discovery.

In the 2008 melamine crisis, Fonterra came in for criticism at home for taking too long to act on reports that the Sanlu company, in which it had a passive interest, was selling baby milk deliberately contaminated with melamine.

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Even then it didn't make the scandal public, leaving that job to the New Zealand Government.

Fonterra's response to criticism was to blame the New Zealand media for over- reacting.

In the DCD scare, Fonterra discovered the residues last September.

It did not tell the Government for several weeks, and the Primary Industries Ministry and Fonterra did not tell the world until January 24 this year. Asian markets, including China, predictably panicked.

Notice a pattern here? This time the Government is unhappy and bankers of the multibillion-dollar dairy industry are understood to be dismayed.

It's time to ask if opponents of the 2001 legislation that enabled Fonterra's creation were right.

They wanted two big companies so Fonterra had competition. So New Zealand didn't put all its eggs in one basket with the whole economy threatened if someone dropped it.

It is time to ask if Fonterra's size makes it vulnerable to systemic problems like an overlooked dirty pipe.

And it is time to ask if Fonterra's size has bred a culture of arrogance and a sense of entitlement to decide it knows best what is good for us to know.

Andrea Fox is a Fairfax specialist farming writer.

- The Press

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