UPDATE 3-China bans NZ milk powder imports on botulism scare-NZ trade min

Sun Aug 4, 2013 6:06am EDT

* NZ's Fonterra finds whey contaminated with
botulism-causing bacteria
    * Product sold to 8 customers in 6 countries, including
Danone
    * China bans all milk powder imports from NZ, Australia - NZ
Trade Minister
    * China imported $1.9 billion of milk powder in 2012
    * Coca Cola to recall batches of product that used Fonterra
whey protein
    * Russia, Thailand reportedly putting in place bans, product
recalls


    By Naomi Tajitsu
    WELLINGTON, Aug 4 (Reuters) - China has halted imports of
all milk powder from New Zealand and Australia, New Zealand's
trade minister said on Sunday, after bacteria that can cause
botulism found in some dairy products raised food safety
concerns that threatened its $9.4 billion annual dairy trade.  
    Global dairy giant Fonterra identified eight companies to
which it had sold contaminated New Zealand-made whey protein
concentrate, exported to China, Malaysia, Vietnam, Thailand and
Saudi Arabia and used in products including infant milk powder. 
    Nearly 90 percent of China's $1.9 billion in milk powder
imports last year originated in New Zealand and economists said
a prolonged ban could produce a shortage of dairy products in
China, including foreign-branded infant formula.
    Australia was caught up in the ban after some of the
contaminated whey protein concentrate was exported there before
being sent on to China and elsewhere.
    

    "The authorities in China, in my opinion absolutely
appropriately, have stopped all imports of New Zealand milk
powders from Australia and New Zealand," New Zealand Trade
Minister Tim Groser told Television New Zealand.
    While there was no official word of a ban from Chinese
authorities, China's consumer watchdog named four companies that
had imported potentially contaminated products from Fonterra.
    In a statement on its website, the General Administration of
Quality Supervision, Inspection and Quarantine identified the
companies as Dumex Baby Food Co., Ltd, a subsidiary of France's
Danone, two subsidiaries of Wahaha Group, one of the
largest beverage manufacturers in China, and the state-owned
Shanghai Sugar, Tobacco and Alcohol company. 
    Fonterra, a big supplier of wholesale dairy ingredients to
multinational food and beverage companies, also said that Coca
Cola's Chinese subsidiary and animal feed companies in New
Zealand and Australia had also been affected.
    The State Food and Drug Administration (SFDA), in an
announcement on its website, said it had told representatives
from Hangzhou Wahaha, Dumex and Coca Cola China to stop sales of
potentially contaminated products and recall any outstanding
product lines with possible contamination as soon as possible.  
    A Coca Cola spokeswoman said the company was
preparing to recall select batches of its Minute Maid Pulpy
Milky product line in China because it had used potentially
contaminated whey protein, but added that because of the
heat-treatment process it uses, there was no risk to consumers.
    "The recall is really a measure we are putting in place to
reassure consumers, but because of our manufacturing process,
our products are safe for consumption in any case," Sharolyn
Choy, Group Communications Director for Coca-Cola Pacific, said
by telephone.
    She said only 25 kg (55 pounds) of the ingredient had been
used out of 4,800 kg received, but did not say how much
end-product would be impacted by the recall.  
    Some of China's biggest food and beverage firms are said to
be customers of Fonterra.
    Fonterra is a major supplier of bulk milk powder products
used in infant formula in China but it had stayed out of the
branded space after Chinese dairy company Sanlu, in which it had
held a large stake, was found to have added melamine - often
used in plastics - to bulk up formulas in 2008. 
    More than six children died in the industry-wide scandal and
hundreds became ill. Foreign-branded infant formula has since
become a prized commodity in China.
    The latest scare coincided with global dairy prices hovering
near record highs as supply struggles to keep up with growing
demand from emerging countries. A ban on New Zealand products
was seen pushing overall prices higher in the near term.
    Economists said domestically produced Chinese dairy supplies
were at low levels and Beijing's ban on imports from New Zealand
and Australia would tighten supplies on the consumer market.
    "Domestic production in China has been fairly weak, so
potentially there could be a shortage of product for a while,"
ANZ economist Con Williams told Reuters. He said China would in
the meantime likely turn to the United States and Europe.
   
    BANS, RECALLS    
    Other countries also were reportedly halting imports and
ordering recalls of New Zealand-made dairy products.
    Russia suspended imports and circulation of Fonterra
products, ITAR-TASS news agency said on Saturday, quoting
consumer watchdog Rospotrebnadzor. Media reports said Thailand
had ordered a recall of Fonterra products imported since May.
    In New Zealand, Nutricia, a division of Danone, recalled
some types of infant formulas sold under the Karicare brand.
    The bacteria behind the latest scare, Clostridium Botulinum,
is often found in soil. The Fonterra case was caused by a dirty
pipe at a processing plant.
    It can cause botulism, a potentially fatal disease that
affects the muscles and can cause respiratory problems. Infant
botulism can attack the intestinal system.
    This is the second contamination issue involving Fonterra
this year. In January, it found traces of dicyandiamde, a
potentially toxic chemical, in some of its products.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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