Botulism scare: Heads expected to roll

Heads will roll at Fonterra over the latest infant formula scare to hit the company, but chief executive Theo Spierings' job should be safe for the time being, farming sources say.

Spierings travelled to China from Europe over the weekend for meetings with manufacturers who have used contaminated whey powder supplied by Fonterra in infant formula and other products.

One well-placed source said "heads will roll" over the latest contamination, which has been traced back to a dirty pipe at Fonterra's Hautapu plant in Waikato.

"I don't think it will go as far as Theo, because he has done the right thing in scooting up to China," the source said.

Spierings' predecessor, Andrew Ferrier, made the mistake of not travelling to China during the Sanlu melamine scandal in 2008, in which Fonterra was implicated.

"So he (Spierings) has done the right thing by going directly to China to be the man on the ground," he said. "Clearly there will be some heads, but that's for later."

New Zealand's reputation for high-quality food products - the driving force behind some $2 billion in annual dairy exports to China - took a hit in January when traces of dicyandiamide, a nitrate inhibitor, were found in New Zealand milk.

Federated Farmers has so far kept its own counsel on the matter, choosing instead to let Fonterra and the Ministry for Primary Industries deal with the problem. Privately, farmers are understood to be furious.

One central North Island farmer contacted by APNZ said the scare was likely to put downward pressure on the farmgate milk price, which has the greatest bearing on farm incomes.

"In the medium term it will do some damage to the brand because we command a premium for quality," he said. "If we can't provide that, then why pay for it" he said.

"I would hate to be at the next Fonterra shareholders' meeting - they'll give them a bollocking,' he said. "The directors will be bracing themselves for it I think because they're so tough on farmers' milk quality."

"Farmers who have milk quality problems have to pay thousands, and sometimes tens of thousands, of dollars in fines to Fonterra and then Fonterra makes a muck-up like this," he said.

"Farmers feel let down that Fonterra has put all this food safety stuff on farmers for a number of years and something like this happens," he said.

One dairy analyst also stopped short of speculating that Spierings would go.

"It will be a test of his (Spiering's) credentials that's for sure, so it will be interesting to see how he comes through," he said.

Spierings was appointed chief executive in 2011 - having previously headed up the Dutch dairy giant, Royal FrieslandCampina - with big ambitions for Fonterra's role in China.

 

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