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 New Zealand dairy giant Fonterra announced Saturday that hundreds of tons of infant formula, sports drinks and other products sold in seven countries could be tainted after tests found bacteria in whey protein concentrate that could cause botulism.
The import bans in Russia and China extend beyond the products now being specifically targeted for recall. How long those trade halts last could indicate the extent of the damage to New Zealand's reputation as a source of top-quality dairy products.
Dairy and other agricultural exports power the country's economy, and China is its single biggest export market. An indication of the seriousness of the threat to New Zealand's trade came over the weekend, when the government assigned 60 officials to work on the botulism scare. Fonterra is the world's fourth-largest dairy company, with annual revenue of about $16 billion.
Consumers in China and elsewhere have been willing to pay a premium for New Zealand infant formula because of high food safety standards and the popular image of the country as a remote, unspoiled environment. Chinese consumers have a special interest after tainted local milk formula killed six babies in 2008.
"As a mother, I am really angry to hear this kind of news," said Wang Qun, 24, who lives near Shanghai and feeds her 7-month-old son milk powder made by Dumex, one of the companies recalling products. "I am surprised to hear that the problem has happened to a New Zealand milk producer. That should be the best place for milk."
She said in the future she may not choose milk powder from New Zealand, but added: "I don't have many choices in China."
At a press conference Monday in Beijing, Fonterra's chief executive Theo Spierings offered an apology to anyone affected by the scare.
"We really regret the distress and anxiety which this issue could have caused," he said.
Spierings said he'd flown to China to provide reassurance in person and because of the importance of the Chinese market to Fonterra.
There have been no reported illnesses as a result of the contamination. The Centers for Disease Control describes botulism as a rare but sometimes fatal paralytic illness caused by a nerve toxin.
News of the tainted dairy triggered a sell-off in the New Zealand dollar. It dropped about two cents against the U.S. dollar, from 79.3 cents Friday before the announcement to 77.2 cents Monday morning. New Zealand Prime Minister John Key said there was "no question" the safety lapse had damaged the reputation of Fonterra and New Zealand.
Fonterra said in a statement that China had suspended imports of the company's whey powder and a type of dairy powder used for making infant formula. It said the ban didn't extend to whole milk powder or other products. The company said China has also increased general border inspections of all New Zealand dairy imports.
China hasn't confirmed any restrictions, and the country's General Administration of Quality Supervision, Inspection and Quarantine didn't immediately respond to a request for comment.
"China has not closed the market to all New Zealand dairy products, it has been quite specific about the range of Fonterra products which it has temporarily suspended," said Scott Gallacher, acting director-general of the Ministry for Primary Industries. "The Chinese authorities still have a number of questions, which we are wanting to work with them on to respond to."
Russia has imposed a wider ban on New Zealand dairy products even though it wasn't among the countries to receive any of the tainted products, Gallacher said.
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 Russia's state sanitary watchdog agency, Rospotebnadzor, said in a statement that it was suspending imports of Fonterra products and taking steps to remove them from stores. The agency sent directives to its branches in the Russian provinces and to the Federal Customs Agency.
It called on Russians to take "reasonable precautionary measures and not to use formulas by Fonterra or any other of its dairy products."
Fonterra said the contamination occurred as the result of dirty pipes in a Waikato plant in May 2012. It said samples turned up a potential bacteria problem in March this year, but that it took until July 31 for testing to indicate the presence of the type of bacteria that could cause botulism.
Asked at the Beijing press conference why it took so long for the problem to show up, Spierings said although the ingredient was produced in 2012, it was only used in making base powder in March this year. At that point, he said, it was retested.
"The supply chain of infant nutrition powders takes a long time because it has many steps and every step is tested very strictly," he said. "The closer you come to the consumer, the more testing you do."
China's official Xinhua News Agency said Hangzhou Wahaha Health Food Co. Ltd., Hangzhou Wahaha Import & Export Co. Ltd., Shanghai Tangjiu (Group) Co. Ltd. and Shanghai-based Dumex Baby Food Co. Ltd. on Sunday began recalling and sealing products with potentially contaminated whey protein.
New Zealand company Nutricia and Malaysia's Danone Dumex have announced recalls of some types of infant formula. Vietnam has initiated a recall of Similac Gainplus Eye-Q infant formula, while Dumex in Thailand has initiated a recall of five types of infant formula.
Thailand's Food and Drug Administration deputy secretary-general Srinuan Korakotchakorn said the agency is trying to find out how many products might be affected and will issue any further recall notices as needed. She said the agency is doing all it can to prevent any more contaminated products from arriving in the country.
"From now on, any products or ingredients containing whey protein must be tested for safety at customs points," Srinuan said.
Fonterra said some of its potentially contaminated whey protein was purchased by Coca-Cola and Australian health food company Vitaco but the manufacturing process used by those companies, including ultra-high temperature treatment, meant their products posed no risk. It said the same situation applied to Chinese beverage maker Wahaha.
In the first half of this year, China imported 371,000 tons of milk powder from New Zealand. That was up 34 percent from the same period last year and accounted for 83 percent of total imports of such products, according to Chinese customs spokesman Zheng Yuesheng.
[Associated
Press; By NICK PERRY and LOUISE WATT]
Watt reported from Beijing. Thanyarat Doksone in Bangkok, Vladimir Isachenkov in Moscow, Minh Tran in Hanoi and Fu Ting in Shanghai contributed.
Copyright 2013 The Associated
Press. All rights reserved. This material may not be published,
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