Queen Elizabeth famously had one in 1992. Now it is dairy
giant Fonterra - New Zealand's largest exporter - that has
experienced an ''annus horribilis'', as agribusiness reporter
Sally Rae reports.
January 2013: Fonterra moves to persuade global
customers that New Zealand dairy products are safe in the
wake of the discovery of dicyandiamide residue in milk.
Chief executive Theo Spierings says the co-operative's
testing found only minute traces of DCD - a nitrification
inhibitor used by the dairy industry to reduce nitrate
leaching into waterways and greenhouse gas emissions - and
they were about 100 times lower than acceptable levels under
European food safety limits.
Labour primary industries spokesman Damien O'Connor questions
why the issue was not disclosed in September 2012 when
Fonterra discovered traces of DCD. Mr Spierings rubbishes Mr
O'Connor's claim it was hushed up to allow the Fonterra
Shareholder Fund float to occur unimpeded in November last
August 3: Shortly after midnight, a Fonterra press
release advises of a quality issue involving three batches of
whey protein concentrate (WPC80) made in New Zealand in May
2012. It is later revealed the contamination was a result of
a dirty pipe at its Hautapu plant in Waikato. A potential
issue was identified in March when a product tested positive
Product samples were tested over the following months and, on
July 31, tests indicated the presence of a strain of
clostridium (Clostridium botulinum) in a sample, which
could cause botulism. WPC80 was used by Fonterra's customers
in a range of products including infant formula, milk powder
and sports drinks.
The announcement makes headlines around the world. It leads
to import bans on affected products in Belarus, China,
Kazakhstan and Russia and is a PR disaster.
August 6: Federated Farmers dairy chairman Willy
Leferink points out no-one was sick and the recall of
products stemmed from Fonterra's own product testing. The
volume involved was a ''fraction'' of the 2.5 million tonnes
Fonterra exported each year - the 38 tonnes represented
August 7: Fonterra chief executive Theo Spierings
apologises for the anxiety caused by the issue. He says
extensive testing shows the potential food safety risk was
''minute but that it was a risk nonetheless'', and the
Ministry for Primary Industries, customers and the public
were immediately informed.
• The first GlobalDairyTrade auction since the scare
sees only a moderate 2.4% hit on prices, which economists say
is in keeping with the normal volatility of the fortnightly
August 8: Fonterra chairman John Wilson, who, until
now, had been the invisible man, appears before the media for
the first time and announces an independent review.
He apologises on behalf of the board and says Mr Spierings
and his team have made the ''right decisions'' and are
continuing to do everything they can, as quickly as they can,
in what has been a complex issue.
But he also says there are serious issues that need to be
learnt from it, which was why, in addition to the operational
investigation Mr Spierings has already committed to, the
board will conduct a comprehensive formal review of its own.
The review will be led by the independent directors of the
Fonterra board, include independent expert advice and
will cover the period from the time the affected product was
manufactured in May 2012 through to the recovery operation.
It is hard not to draw comparisons with Mr Wilson's
predecessor, Sir Henry van der Heyden, who surely would not
have remained silent for so long.
August 11: Prime Minister John Key confirms a
ministerial inquiry will be held.
August 12: Mr Wilson (right) announces Fonterra's
board has established the WPC80 inquiry committee and charged
it to oversee an independent review into the circumstances
giving rise to the affected whey protein concentrate and
subsequent chain of events.
The committee will be chaired by independent director Sir
Ralph Norris, joined by fellow independent directors Simon
Israel and John Waller, farmer elected directors Blue Read
and Nicola Shadbolt, and external independent member Dame
Judith Potter, with a second independent member yet to be
• Fonterra announces Maury Leyland, group director of
strategy, will lead its recovery management team for the
precautionary recall and will oversee the operational review,
which is separate to the one being conducted by the board of
directors, but the findings will be shared directly with
them. The operational review will be completed by the end of
• Ministry for Primary Industries begins a compliance
investigation into the incident to determine whether
regulatory requirements under the Food Act and the Animal
Products Act were met by all parties involved, or whether any
parties may have committed breaches or offences.
MPI acting director-general Scott Gallacher says the ministry
has a ''number of questions'' about the incident, including
when relevant parties were informed, and when they should
have been informed. Maximum penalties for breaching
regulations under the Food and Animal Products Acts range
from $100,000 to $500,000 and/or up to 12 months
imprisonment, depending on the nature of the offence. MPI
will also undertake a formal debriefing process on its own
response to the incident ''to identify any lessons learned''.
August 14: The contamination scare claims its first
scalp with the resignation of NZ Milk Products managing
director Gary Romano - once touted as a possible successor to
former chief executive Andrew Ferrier. Mr Spierings assumes
interim responsibility for the day-to-day operations of NZ
• The first inquiry committee meeting confirms terms of
reference for the inquiry. Further independent member Prof
Stuart McCutcheon will join the committee. An international
expert on the manufacturing and safety of food and food
components, Jacob Heida, is appointed to assist with
August 16: Two unnamed Fonterra senior managers are
placed on leave. August 18: Fonterra rejects the allegations
on which a temporary injunction has been made to prevent it
selling its products in Sri Lanka.
The injunction, which the co-operative says was brought by
three individuals who work for a local union, was over DCD
contamination fears and prevents Fonterra from selling and
advertising its products in Sri Lanka for the next 14 days.
Fonterra says independent testing has found no traces of DCD
in any Fonterra branded products in Sri Lanka.
August 19: Primary Industries Minister Nathan Guy and
Food Safety Minister Nikki Kaye release the draft terms of
inquiry for the Government's investigation into the WPC80
The inquiry will be in several parts - Part A will look at
how the potentially contaminated whey protein concentrate
entered the New Zealand and international market and how that
was subsequently addressed; Part B and C will look at
regulatory and best practice against the background of this
incident in relation to the dairy industry, including the
response of regulators.
The inquiry will report on any recommended legal, regulatory
or operational changes. Miriam Dean QC has been invited to
chair the inquiry.
• Export certificates for four consignments of
lactoferrin - a naturally occurring protein found in milk -
manufactured by West Coast-based independent dairy
co-operative Westland Milk Products are revoked by the
Ministry for Primary Industries, following the detection of
nitrate levels that exceed the New Zealand standard. The
consignments were derived from two affected batches of
lactoferrin manufactured by Westland at its Hokitika factory.
One batch was exported directly to China as an ingredient for
other dairy products and the second batch was supplied to
Tatua Co-operative Dairy Company and also exported to China.
Westland's chief executive Rod Quin says the product has been
tracked and quarantined and the nitrate levels do not
comprise a food safety risk. Westland is investigating to
''establish the root cause'' and has implemented ''corrective
August 21: Fonterra says it has put in place a
programme that will provide additional quality assurance for
its nutritional plants and it will ''check, double check and
triple check, if necessary''. The programme will begin at the
Hautapu site this week before being introduced in Fonterra's