NZ dairy products delayed at Chinese ports

New Zealand dairy products ranging from milk powder to mozzarella cheese are being held on the wharves at Chinese ports as officials debate what form of additional testing should be applied following Fonterra Cooperative Group's whey protein scare.

The Ministry of Primary Industries in Wellington confirmed to BusinessDesk late last week that exporters other than Fonterra are experiencing delays.

However, it appears the problem is not a blanket ban or evidence of anything more than the fact that authorities at each Chinese port are interpreting centrally issued orders to apply caution to dairy imports into China with additional caution.

A temporary suspension has already been announced on the import of whey powder, whey protein concentrate and dairy base powder produced by Fonterra and containing WPC as an ingredient. That followed Fonterra's disclosure earlier this month that a batch of the product was found to contain a bacterium, clostridum botulinum, capable of producing the life-threatening disease botulism.

"MPI is aware that some other exporters are experiencing delays at the Chinese border, and MPI continues to work closely with Chinese authorities to provide information as required and resolve any issues," a spokesman said on Friday.

Food processing techniques and the specific conditions required for the bacterium to become active mean human health risk was very low from the contamination and no cases of botulism caused by Fonterra product have been reported in China, Australia or New Zealand, where most of the resulting product recalls were initiated.

However, with food safety the biggest issue for Chinese consumers, whose faith in food sources has been battered by a string of food scares involving their own producers, the issue has come as a blow to Fonterra's reputation, if not so far to sales.

Soundings in China by BusinessDesk suggest demand for Fonterra's ingredients by Chinese food manufacturers and demand in supermarkets for New Zealand-sourced infant milk formula have been unaffected after a sharp, initial reaction when the issue was first revealed.

The planned "soft" launch by Fonterra of new Anchor-branded products into the fast-moving consumer goods market in China has gone ahead, but with emphasis on New Zealand with the company of manufacture removed for now.

A supermarket manager at a branch of the upmarket Ole supermarket chain in Shanghai told reporters accompanying a New Zealand food exporters tour to the site there had been no appreciable drop in sales of brands such as Nutricia Karicare or identifiably New Zealand-branded formula.

The Ministry of Primary Industries is understood to be in talks with Chinese food safety authorities to determine what additional levels of testing should be applied to dairy products crossing Chinese wharves.

Trade officials are at pains to stress the issue reflects the fact that while China issues regulations from Beijing, these are interpreted autonomously by officials operating at each port. While delays to a wider range of New Zealand dairy products may persist for some time, they reflect caution rather than a punitive attitude, despite early Chinese media coverage deeply critical of Fonterra's third Chinese food scare since 2008.

"Border testing is an open and transparent process, and is a standard part of the international food trade," said Fonterra group manager for food safety and quality, Ian Palliser, in a statement last week.

On a previously planned visit to Beijing last week, Foreign Affairs Minister Murray McCully stopped short of apologising to the Chinese government for the botulism scare, albeit acknowledging it as a cause for "regret."

His visit coincided with the revoking of export certificates for four consignments of lactoferrin produced by Westland Milk, a Fonterra competitor, which was found to have raised levels of a nitrate, which is not a threat to human health unless ingested in very large quantities.

(BusinessDesk; Pattrick Smellie accompanied a food exporters' tour of southern China, funded by the ANZ Bank, and travelled independently to Beijing.)