Botulism scare hits New Zealand dairies

A botulism scare has prompted China and Russia to stop importing some New Zealand dairy products, New Zealand officials said Monday, denting the country's reputation as a supplier of safe, high quality food.

New Zealand dairy giant Fonterra announced Saturday that hundreds of tonnes 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.

Dairy company apologizes

At a news 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.

In the first half of this year, China imported 371,000 tons of milk powder from New Zealand. That was up 34 per cent from the same period last year and accounted for 83 per cent of total imports of such products, according to Chinese customs spokesman Zheng Yuesheng.

The Centers for Disease Control describes botulism as a rare but sometimes fatal paralytic illness caused by a nerve toxin.

New Zealand dollar falls

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.

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.

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.