The potential contamination of Fonterra products with botulism occurred as a result of a dirty pipe at the company's Hautapu plant, it says.
Fonterra is still refusing to disclose which of its eight customers were potentially affected by the contamination, saying it was up to them and their regulatory authorities to make those decisions.
Managing director of New Zealand milk products Gary Romano said the contamination occurred as a result of a dirty pipe at Fonterra's Hautapu plant in Waikato.
"[After the contamination was detected] we went back immediately and isolated a very little used piece of pipework that was not as sanitary as it should be," he said.
"Further product coming from that plant has been tested."
Fonterra - New Zealand's biggest exporter, which sells 371,000 tonnes of infant formula each year to China - announced early today that some of its products used in infant formula and sports drinks may contain botulism.
Shortly after midnight the company and the Ministry for Primary Industries announced a "quality issue" involving three batches of whey protein concentrate produced in a New Zealand manufacturing plant in May last year.
Fonterra said tests showed the whey concentrate appeared to contain a strain of Clostridium botulinum, which can cause botulism. The concentrate is used in a range of products including infant formula, growing up milk powder and sports drinks.
Dairy products such as fresh milk, yoghurt, cheese, spreads and ultra-high temperature milk products are not affected. So far there have been no reports of illness linked to consumption of the affected whey protein.
Fonterra yesterday advised eight of its customers and said they were each urgently investigating whether any of their products were affected. If needed, they will issue recall notices.
A spokesman said he could not name the eight companies or the products involved or say which countries the products were sold in.
The dairy giant's chief executive Theo Spierings said they took take matters of public health extremely seriously.
Mr Spierings said they were doing everything they could to assist the eight customers affected in ensuring any product containing this ingredient is removed from the marketplace and that the public is made aware.
"We are acting quickly. Our focus is to get information out about potentially affected product as fast as possible so that it can be taken off supermarket shelves and, where it has already been purchased, can be returned," Mr Spierings said.
Labour Party's Primary Industry spokesman Damien O'Connor said the Government had displayed a "slack and cavalier approach" to biosecurity.
"My concern is that off the back of the just released meat industry report, that the minister and the ministry don't have the capability and the skills to handle this.
"But we have to hope they can do this, they can handle it and handle it properly, because if they make the same mistakes as they've made with the handling of the meat industry, then we're all going to be in trouble."
New Zealand needed to have robust, efficient and effective systems to ensure exports were top quality and safe for consumers, Mr O'Connor said.
The Government restructure of the primary industries sector was done as a cost cutting measure and may have contributed to this latest issue, he said.
The announcement is likely to cause more shock waves in New Zealand's trade relationship with China, which has repeatedly accused New Zealand of lax food standards, especially in infant formula.
Infant formula is a highly sensitive issue in China and demand for imported products has surged since the country's 2008 melamine scandal, in which six babies died and thousands more became sick after consuming dairy products tainted with the industrial chemical.
That demand means New Zealand-made formula can fetch prices of up to $70 a can in China, resulting in an explosion of brands.
In May, the New Zealand Government rushed to reassure overseas consumers that New Zealand milk was safe after a Sri Lankan government minister warned it could be contaminated the toxic agricultural substance dicyandiamide (DCD).
The Ministry for Primary Industries provided an official assurance that the level of radioactivity in New Zealand animal products is negligible, with levels consistently below 1 unit per kg.
In May, the state-run CCTV network in China ran a series of critical news items on our standards.
Fonterra said it initially identified a potential quality issue in March this year, when a product tested positive for Clostridium. Product samples were put through intensive testing over the following months and on Wednesday, tests indicated the potential presence of a strain of Clostridium botulinum.
Managing director of NZ Milk Products, Gary Romano, said they immediately contacted their customers and the appropriate authorities, so that any potentially affected product could be removed from the marketplace.
The Ministry for Primary Industries acting director general, Scott Gallacher, said their focus was on ensuring that there were no contaminated products on the New Zealand market.
"At present, we are continuing to verify information provided to us, and we will update further if any products are identified. Products on the market will be recalled if they are found to contain the contaminated protein."
Mr Gallacher said the government had advised the appropriate regulatory authorities in overseas markets of the situation.
"We are also working with Fonterra to establish what has happened, how it happened, and what can be done to ensure it does not happen again."
New Zealand is the biggest supplier of infant formula to China, selling 371,000 tons to the world's second-biggest economy in the first half of the year.
Fonterra is poised to push into China's branded infant formula market with its own Anmum formula brand, which is already sold in Malaysia and Indonesia, during the latter part of this year.
In June, Fonterra said it planned to first sell its infant formula in Beijing, Shanghai and Guangzhou and then expand sales to other parts of the country if the initial launch proves successful.
Botulism
• Botulism is a rare but serious illness caused by a bacterium which occurs in soil. It produces a toxin that affects your nerves. Foodborne botulism comes from eating foods contaminated with the toxin.
• Intoxication botulism can result when food processing failure and/or temperature abuse allows germination of spores and proliferation of vegetative cells.
Symptoms:
• Range and severity vary. Initial symptoms include nausea, vomiting, and diarrhoea.
• Neurological symptoms follow, beginning with cranial nerve areas including eye, throat and mouth, and then travelling down the body paralysing motor nerves.
• Lack of muscle co-ordination, fatigue and respiratory impairment are characteristic.
• Constipation may develop after onset of neurological symptoms; abdominal pain may be present throughout.
Long term effects:
• Most cases (up to 80%) require hospitalisation for a 4-5 week period. All BoNT interfere with neurotransmitters, a temporary condition eventually restored by motor endplate regeneration. Effects are not usually long term.
