New Zealand-basedFonterra announceda little over a week ago that some batches of its milk powder might contain the botulism-causing bacteria Clostridium botulinum, and product concerns didn't take long to echo across the globe. FonterraCEO Theo Spierings declaredby mid-week that the scare was over as a dirty pipe at a New Zealand processing facility was blamed.Inquiries are now underwayby the company and New Zealand's government, however, and it looks like the full story behind the international dairy power's problems is just beginning to unfold.
With as much as10% of New Zealand's economydependent on Fonterra's business, the scandal has far-reaching consequences within the country in a host of other countries and companies with whom Fonterra does business. As of Monday, here's the rundown of who has been affected, what their reactions mean for Fonterra and what you can expect to see happen next:
IMPACT IN NEW ZEALAND
New Zealand is expected to announce details behind a government inquiry that will follow a separate review by the nation's agriculture regulator this week,Reutersreports. In the meantime, Ralph Norris, aFonterraboard member, is leading a review on behalf of the company, which is expected to take about six weeks.
(Image credit:Wikimedia Commons)
IMPACT IN OTHER COUNTRIES
1. China:China is no stranger to milk powder problems, having faced its own scandal in 2008 over products tainted with melamine. Now, the Chinese government has pledged to keep a close eye on companies using powered milk products andpunish offenders severelyif necessary. The country reportedly banned the importation of whey protein products, as well as base powder formula that is used for manufacturing infant formula. Unsurprisingly,Fonterra'sChinese competitors saw gains amid the scandal,The Wall Street Journalreported.
Underscoring the weight of the matter,Prime Minister of New Zealand John Keyhas announced that he will visit China to address the matter after inquiries have been completed.
2. Russia:Rospotrebnadzor, Russia's regulatory body for consumer issues,reacted strongly, banning the importation of Fonterra dairy products while an investigation continues. That was a big deal, considering Fonterra sold around $120 million in products to the country last year.
[UPDATE:Russia, Belarus and Kazakhstan have now banned almost all Fonterra products, even as Fonterra tries to reassure them that the botulism crisis is over,NZ Newswirereports]
3. Sri Lanka:Fonterra is disputing test results that showed traces of dicyandiamide, an toxic chemical used in fertilizers, in its milk powder,The New York Timesreported. The company, however, still pulled implicated batches in Sri Lanka as the government there enacted an advertising ban on Fonterra's Anchor brand.
4. Australia, China, Malaysia, New Zealand, Saudi Arabia, Thailand and Vietnam:Eight Fonterra customers across these seven countries were reportedly affected by the bacteria problem, the company asserted.
5. Brunei:Brunei's Ministry of Healthannounced a ban on the importation, distribution and sale of Fonterra milk products,Xinhuareported. No incidents had emerged in the country, but regulators there decided not to take any chances.
COMPANIES AFFECTED
Of the eight customers informed about possible contamination of products containing whey protein, Fonterra said three were food companies, two were beverage companies and three were companies that manufacture animal-stock feed.
1. Nutricia New Zealand Ltd.:The company recalled batches of two Karicare infant formulas that it sells in New Zealand,Bloombergnoted.
2. Coca-Cola China:Coca-Cola's Chinese wing quarantined a 10,560-pound shipment of whey protein, though some of the products was used in batches of Minute Maid Pulpy Milk, which Coca-Cola maintains is safe, thanks to precautions in the manufacturing process.
3. Danone Dumex (Malaysia) Sdn. Bhd.:The company recalled batches of four of its infant formulas.
4. Dumex, two subsidiaries of the beverage-focused Wahaha Group and China's state-owned Shanghai Sugar, Tobacco and Alcohol company:China's China's General Administration of Quality Supervision, Inspection and Quarantine identified these four companies as having imported products that might have been compromised.
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