Petty politicking feeds perception problems

Opposition MPs are supposed to oppose the government but in trying to score points against the MPI, Labour’s agriculture spokesman Damien O’Connor has gone far, too far:

Fonterra chief executive Theo Spierings has torn strips off Labour agriculture spokesman Damien O’Connor for, he says, endangering the whole of the New Zealand dairy industry with “drastic” allegations relating to traces of a benign chemical, DCD, found in some powdered milk.

O’Connor issued a press statement alleging a cover-up of the DCD findings in September to allow the Fonterra Shareholder Fund float to occur unimpeded in November.

“If you do those allegations, you better come with some evidence,” Spierings told BusinessDesk. “What you are doing here is not just a Fonterra issue, it is a New Zealand issue. You are attacking your key sector of the country.

“I’m sorry. I get a little bit emotional about it. I don’t like this kind of attitude,” said the recently appointed Dutch ceo, who said O’Connor risked undoing three days’ intensive work, including Prime Minister John Key, with international investors and media. The issue got out of control internationally when a Wall Street Journal article questioned the safety of New Zealand milk.

 Spierings is deeply offended by O’Connor’s attack, and scathing of WSJ’s use of a local journalist he claims was “filling in for someone” to kick the issue into international prominence.

He defends Fonterra’s process once it found DCD, a nitrate inhibitor used to curb greenhouse gas emissions from farming, in tiny quantities in milk powder last spring, saying the first thing considered was whether it got “a green tick on food safety.”

It did. DCD levels were 100 times lower than standards in the European Union. In other parts of the world, no standards exist.

With a “dark green” tick on food safety, the company had “a little bit of time” for collective action with fertiliser companies, telling them they must either manage the DCD issue with farmers or have Fonterra tell farmers to stop using it in the meantime, while international standards were sorted out.

The manufacturers, Ballance Agri-Nutrients and Ravensdown, withdrew fertilisers containing DCD voluntarily, a fact not notified publicly until late last week.

“We are coming with answers and telling the truth,” said Spierings.

FSF units took a small hit early in trading, falling as much as 9 cents to $7.14, as international investors digested the information Fonterra sent on the issue.

The biggest risk for Fonterra would be if one country were to decide to impose even a brief, precautionary ban on milkpowder imports, which constitute a large proportion of Fonterra’s $14.5 billion annual export revenues, said Andrew Bascand, managing director at Harbour Asset Management in Wellington.

“To date, there’s been no market there’s been that sort of reaction. Fonterra appear to be on the front foot handling it. The commentary from our Chinese agents says they feel comfortable with where are at.”

Bascand said any weakness in the FSF price caused by the issue would be seen by some investors as a buying opportunity. The units were sold at IPO last November for $5.50. They listed at $6.60, and have risen above $7 since.

Spierings rubbished O’Connor’s claim the DCD issue was hushed up ahead of the listing, the largest equity event in New Zealand stock exchange’s history for at least a generation.

“If there had been a public health or safety issue, we would have disclosed,” Spierings said.

The range of elements being tested in milk was constantly expanding as testing was becoming more sophisticated. Where there was no public health risk, Spierings argues against mandatory immediate disclosure because of the volume of disclosures that would create.

“We should not need to disclose in our whole business things we want to improve,” said Spierings. “It would get (to be) a zoo. We could not run the company.”

O’Connor’s media release was headlined hard sell after milk taint hushed up.

It not only questions the integrity of Primary Industries Minister David Carter, the MPI and Fonterra, it undermines are very, very high food safety standards.

This is not a health or safety issue it’s a marketing and perception issue.

O’Connor’s petty politicking has the potential to do far more damage not just to Fonterra but to New Zealand’s hard-earned and well-deserved reputation for food safety.

The trade-weighted increase has increased in the first two GlobalDairyTrade auctions this year. This week’s auction will give an indication of whether the perception of problems has affected demand for our products.

25 Responses to Petty politicking feeds perception problems

  1. robertguyton says:

    Is it true, Ele, that there are traces of melamine in the test samples?
    If so, and however minuscule, I’d have expected someone in the business to be on the look out for that sort of vulnerability, given the coverage melamine got in China.

  2. homepaddock says:

    Where did you come across any suggestion of melamine?

    Yours is the first suggestion I’ve heard of it and if you don’t have a credible source for it you’re sinking lower than O’Connor.

    The government, Fonterra and fertiliser companies have been open about the issue, the only substance found was minute traces of DCD.

    The only mention of melamine I’ve come across is in explaining the very significant differences between it, which poses a safety risk at any level, and DCD which does not in the tiny amounts detected. No-one could consume enough milk powder or milk to ingest sufficient DCD at the levels detected to cause any harm.

  3. TraceyS says:

    There was a mention of it on One News last night I recall, Ele. But the source of the claim was not identified. Robert should perhaps remember that the news is occasionally unreliable! Would be interesting to know the accuracy of the claim.

  4. TraceyS says:

    I was wrong, this claim was not on the news, but I did see it somewhere. Come on Robert, where did you get your information? Is it reliable or hearsay? Qualify what you say please.

  5. ploughboy says:

    melamine will be a diversion tactic by those of green persuasion who advocated to use of dcd

  6. robertguyton says:

    I’m merely asking the question, as I heard that the same report as Tracey. There’s no need to get all defensive and frothy, I’m simply alerting you to the possibility and expect you’d be interested. Very quick to conndem, you people. Ploughboy’s reaction lacks substance.

  7. homepaddock says:

    Tracey left a comment on your earlier comment saying she was wrong, it wasn’t on the news, but she did see it somewhere and asked you to say where you saw it.

    I did hear a radio report which said the Chinese symbol for melamine was similar to the one for DCD which could lead to confusion between the two but I’ve found no reference to melamine in NZ milk.

  8. robertguyton says:

    Probably Straight Furrow or another of the many farming newspapers I get. What do you mean, “qualify what you say”? I didn’t make a claim. I asked a fair question. You yourself said you’d seen mention of it somewhere.
    Sensitive much!

  9. TraceyS says:

    I’ll try and find out where. Surprised you don’t remember precisely given “sensitive much!”

  10. robertguyton says:

    But Ministry for Primary Industries director-general Wayne McNee said in a statement the amount of small DCD residues found posed no food safety risk.
    “DCD is not melamine. It is a different chemical and has none of the toxicity that melamine has.”

    Read more:

    That wasn’t too hard, was it? Clearly Wayne McNee had heard that melanine was being touted. I notice he didn’t cite his source.

  11. robertguyton says:

    Oh, and Ele, did I sink lower than O’Conner? Did Tracey, who’d heard the same thing? Did McNee? There seems to be a whole gaggle of us low-lifes, asking questions. How low can one go? Asking questions!!

  12. TraceyS says:


    “Are DCD and melamine the same?


    Melamine is present in DCD in very small amounts. The melamine in DCD causes no health or regulatory issues. Testing has picked up no melamine residues in milk products from DCD use.

    International standards setting bodies have established a safe limit for melamine residues in food. This limit is far above any potential residue of melamine from this DCD use.

    Were any melamine residues detected in the milk tested for DCD?

    No. MPI testing under the National Chemical Contaminants Programme has picked up no melamine residues in raw milk from DCD use – this is consistent with expectations.”

    So “melamine is present in DCD in very small amounts” but not in the milk or milk products. Very likely that it is either degraded in the environment or metabolised by the cow, or simply doesn’t pass through to the udder.

  13. robertguyton says:

    “Melamine is present in DCD in very small amounts.”

    Good Lord! Melamine, being sprayed onto New Zealand’s dairy pastures!
    As I said in my first comment – the one your combined backs went up over,
    “If so, and however minuscule, I’d have expected someone in the business to be on the look out for that sort of vulnerability, given the coverage melamine got in China.”

    It’s like extracting teeth!

  14. robertguyton says:

    “I did hear a radio report which said the Chinese symbol for melamine was similar to the one for DCD…”

    You what, Ele???

    I hope you didn’t swallow that tripe!

  15. Mr E says:

    Oh really?

  16. Mr E says:

    Cyanide is contained in many plants….. Oh lord!!!! Let’s all drink milk instead!

  17. robertguyton says:

    Mr E, there you go, all frothed-up again, over such a tiny issue. I didn’t suggest that melamine was dangerous, just that those charged with ensuring the Fonterra brand doesn’t get damaged should have had a better handle on this. Forewarned is forearmed, a stitch in time…
    That said, take care, Mr E, not to pig-out on apricot kernels!

  18. Mr E says:

    Frothed up? Robert you are out of your tree.
    Along with your silly concern of melamine you are missing point that such suggestions on a blog are not helpful. You don’t need a very big empathy bone to figure that out.
    If you had a real concern, you a would make a lot more positive progress calling your friends Fonterra.

  19. TraceyS says:

    No Robert. I think backs went up because you said (in your first comment) “…are traces of melamine in the test samples?” and then you wrote “If so, however minuscule…” That was loaded with an assumption of correctness because you only considered the answer to your question to be “yes”.

    Actually the answer to your question was “no”, apparently.

    If you had wanted to ask an innocent question, you might have framed it more along the lines of “what trace substances can be found in DCD?”. That would show genuine curiosity. But it was not an innocent question now was it? Be honest!

  20. TraceyS says:

    Yes Mr E, anyone with a genuine interest and true concern would do their homework before posing such a biased question and answering it all in the same breath. But as it turns out there was nothing behind the comment(s) but froth!

  21. robertguyton says:

    The thing that concerns most people about this issue, is the concealment of the facts by Fonterra for what people believe to be a suspiciously long time. The presence of melamine in DCD is inconsequential. The public, when kept in the dark, become suspicious. Fonterra won’t benefit from a public that views them with suspicion. The melamine tragedies should have taught that lesson, but it seems not.

  22. Gravedodger says:

    Those “most people”, Robert, the basis of that claim is?

    A hastily called meeting of the Riverton branch of the green party maybe, or a few of the illinformed sipping lattes in street cafes

    You claim “secrecy” by Fonterra!!!.

    Are you also aware the company did not give out any publicity last Spring on the preferred spread used in company cafeterias, or the types of cleaning products used in the office cleaning contracts.

    DCD was detected in some milk products at levels around 1% of the limit imposed by the EU remembering the EU is the only government entity that has such a protocol on DCD levels in place.

    Maybe Fonterra saw the whole matter as very very minor and apart from the scurrilous actions of little Lucy Craymer, desperate Charles Anderson and those who will take any opportunity to denigrate that company as laudable while disregarding the potential damage such irresponsible actions can have.

    Yes with the enormous benefit Hindsight brings it was an error but for anyone with a smidgeon of understanding of commercial reality, perfectly understandable, only exposed by the reckless behavior of ‘churnalists’ doing anything for a story no matter how reprehensible it may seem to some.

    The whole matter does not even qualify as a storm in a teacup, not even an eggcup.

  23. Mr E says:

    On planet Robert does everyone constantly say “inconsequential” things in the media? I can see that would be very helpful. Is planet Robert filled with suspicious conspiracy theorists?

  24. TraceyS says:

    “The presence of melamine in DCD is inconsequential. The public, when kept in the dark, become suspicious.”

    “Under your bed, [Robert]! Never forget what’s under your bed!

    Maybe you should try reassuring the public. Not all of them are blessed with your fine ability to look into matters in such a rational manner…

  25. TraceyS says:

    That was genuinely a very entertaining comment, Gravedodger. Made me laugh. More please…! 🙂

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