Key is downplaying the reaction as the risk that’s run when notifying the public about something that is not a health issue.
Trace residues of dicyandiamide, or DCD, a fertiliser used to combat climate-warming nitrate runoff from pastures, were detected in some Fonterra milk products in September but the discovery was not made public till last month when fertiliser companies said they were removing their products from sale.
Fonterra and the Ministry for Primary Industries say there was never a food safety issue, but some industry players have complained about the way the matter was communicated and say the Government did not act early enough to reassure trading partners.
Yesterday baby formula exporter New Image was reported saying the industry was in damage control and that competitors were exaggerating the problem to win back market share throughout Asia.
The company notified the NZX on Friday that recent publicity about the DCD problems was causing problems within multi-level marketing countries and with its retail customers.
Last week, Biopure Health said the DCD incident had been a public relations disaster for the dairy industry and stung sales of its infant formula in China.
New Image chairman Graeme Clegg criticised the lack of warning from the Government so it could get products tested to show customers they were safe.
"We've had no opportunity to prepare or defend ourselves with the way it has been uncovered,” Clegg was reported as saying.
A week ago, after damaging international headlines emerged following the January 24 announcement of the DCD discovery, ministry officials and New Zealand’s ambassador to China, Carl Worker, met with China’s quality supervision body, the General Administration of Quality Supervision, Inspection and Quarantine.
Worker also held a press conference with Fonterra’s global trade managing director Kelvin Wickham to answer questions and assure the Chinese there was no food safety issue.
Key said the Government had started working on the problem as soon as it was advised of it, and he was not sure what else could have been done.
There would always be a reaction when dealing with a sensitive area and he was sure Fonterra was doing an internal review on the issue.
“Once they detected those issues of DCD in milk then that will always pose a communications problem with the best will in the world, and they have been working their way through that," Key said.
He said he learned of the issue on January 18 – six days before it became public – but he had no advice that it had stopped trade or affected Fonterra’s share price or the New Zealand dollar, and denied there had been any coverup.
“The Government has accepted the view, because we believe it to be correct, that there are no health issues from the traces of DCD that have been detected in milk products.
“We remain of that view and so there would be, and always are, risks when there is any kind of notification because people can extrapolate that information, and I think we saw that where it was described as a toxic substance. Well technically yes it is, but not in the quantities that were out there.”
Fonterra had notified the ministry of the discovery in late October and during November and December there had been quite a lot of communication between them, he said.
Key stressed that finding trace residues of a substance “where you would need to consume a swimming pool-full of the stuff to have any health effects” was quite different to genuine health issues.
“I’m sure the company would respond to a genuine health issue in a very different way. For a start off, they would have to pull that product from the market place. Now that wasn’t the case when they found these very minor traces.”
He defended the time the ministry took in going public. It had worked its way through the processes and, because it wasn’t a health issue, he did not think the ministry saw it as a major issue.
In its documents, the ministry says it was notified by Fonterra in November. It then set up a working group with some in the industry to assess the use of DCD and to come up with a course of action.
The working group met twice in December and once in January before the fertiliser companies eventually acted.
Independent milk company Westland Milk Products had its product tested after it learned about the DCD discovery in Fonterra's products and it reported last week that it had found traces in samples of its pre-November product.
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