Friday, March 29, 2024

Silver lining could be stronger co-op

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The Clostridium botulinum scare that wasn’t created a month no one in dairying ever wants to repeat but out of it could come a stronger industry with an enhanced reputation.
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Fonterra chairman John Wilson put it succinctly when he said “Fonterra has a lot to learn from this”.

But the wider industry did as well; other processors, regulatory officials, the scientific community and the Government.

Wilson was speaking from Singapore on his way from Sri Lanka to China where Fonterra board members were meeting key customers.

“When we found out we had a false positive, yes relief was part of it but really it’s a deep, deep frustration that it’s created all this unnecessary anxiety,” he said.

Shared pain

Everyone connected to the industry had felt the pain of the event. In looking back over the events of the past month he said, “You can throw stones all day long but evidently we were not well equipped to deal with it (the contamination scare).

“We’ve got to be able to far more cleanly and clearly deal with these kinds of issues than we’ve been able to of late – and that goes for all stakeholders in this.”

The exhaustive reviews – the operational review, the board-instigated review, the joint ministerial review and a Ministry for Primary Industries (MPI) compliance review – will identify and presumably provide answers to how all participants can more cleanly and clearly deal with any slipup in the future.

“The ministerial review is particularly critical to ensuring New Zealand’s food exporting industries have the systems and capabilities available to them that meet tomorrow’s needs not just today’s,” he said.

“NZ farming systems are becoming more complex, testing right through the supply chain is becoming more intensive, specialised and accurate and the whole food supply chain itself is becoming longer and more complex.

“Fonterra has more product now going directly to consumers than ever before and more sophisticated ingredients going to its customers to be used in a wide range of finished products. The change has been rapid and we have to know we’re operating using the right platforms and have the right behaviours.”

Findings from the reviews into the whey protein concentrate (WPC) contamination wouldn’t be shied away from and transparency in what they said and how Fonterra responded was critical to a more positive outcome from the whole experience.

That transparency – even when it meant an at times uncomfortable view – is what’s already stood NZ in good stead in the eyes of Chinese consumers.

“By the third week of this our sales people were reporting unprecedented demand out of that market,” Wilson said.

“Consumers were telling our customers they wanted Fonterra products because we were transparent and upfront – and that was before the false positive announcement.”

Someone well qualified to comment is former Fonterra China managing director Bob Major who headed its operations in that country when the Sanlu melamine disaster struck. Earlier last month, just two days after the botulinum issue was revealed, Major spoke at the New Zealand Institute of Primary Industry Management conference in Christchurch.

He was the vice chairman of Sanlu at the time of the disaster and the highest ranking official who didn’t end up in jail. The only reason he was standing talking to the conference and not in jail was because of Fonterra’s and his own actions in blowing the whistle on the contamination when they discovered it, he said.

Having clearly defined values and being seen to be sticking to them was crucial for success in the Chinese market.

“Those values are a survival mechanism,” he said.

Fonterra’s values in blowing the whistle on itself in the botulinum scare would very likely stand it in good stead too.

Transparency and speed of action were also key as was a crisp, clear message both in the early stages and through the recovery phase, he said.

Just how well Fonterra has ultimately measured up on those counts is yet to be decided.

Others caught in the fall-out have been less complimentary over what they’ve termed “mishandling” of the issue at the outset. Communications were not clear or clean, with some of that due to the fact Fonterra was fronting the recall for the first few days even though it had no visibility into the long and complex supply chains of its customers.

MPI’s WPC Incident Tracing and Verification Report, released on August 25, details that complexity clearly.

Danone’s Nutricia Karicare range was hit hard, with a recall of 67,000 cans of infant formula. But in some cases the supply chain from Nutricia to the final consumer was anything but direct. MPI’s report said in some cases it was three companies long with two main streams through which product was exported to Hong Kong.

One of these was through food wholesaler Gilmours which sold it on to third party registered dairy exporters.

The other was through supermarkets, including three Countdown stores which buy milk powder but don’t sell it on their own shelves, but to exporters.

Traceability

As part of the review it’s expected traceability will come under the spotlight. But questions also remain over why Fonterra took it upon itself to be so visible and public in the recall process once it had revealed the initial problem. Some of the most important detail just couldn’t seem to rise to the surface, with the fact it was a precautionary recall with a only miniscule chance C. botulinum was even present not conveyed clearly.

The message was confused by Fonterra’s former NZ Milk Products general manager Gary Romano when he repeatedly said on a television current affairs programme it was the toxin that had been found and not just the bacteria that could produce it. How he came to believe that is yet to be understood and why he wasn’t corrected during the show by his public relations minders is also unknown. He declined to be interviewed.

Even after the AgResearch results had been declared false positives and further testing by laboratories had identified the more benign C. sporogenes as the culprit confusion still remains.

AgResearch has stood by its test results but hasn’t said what exactly they were or what it delivered to Fonterra as a conclusion from its testing.

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