Rural round-up

May 8, 2014

Despite Strong Currency, New Zealand Winemakers Are Thriving  – Neena Rai:

New Zealand’s wine exports hit a record high in the year through end-March, led by rising demand for new-world wines from British, American and Canadian consumers.

New Zealand wine exports reached more than NZ$1.3 billion in value in those 12 months—up around 9% on the year-earlier period, according to data from Statistics New Zealand.

The gain was fueled by a bumper harvest in 2013, which has made it possible for New Zealand’s vintners to ramp up wine sales overseas.

“The very robust export performance reflects the continued demand in key markets and increased availability of the wine from the 2013 vintage,” said Phillip Gregan, chief executive officer of industry body New Zealand Winegrowers. “We expect further strong growth in the year ahead when the 2014 vintage wines are released” he added. . .

Dairy firm wants restrictions removed:

Dairy livestock genetics company LIC is asking the Government to consider removing regulations that were imposed on it when it had a monopoly on national dairy herd testing.

The Ministry for Primary Industries (MPI) has started consultation as the dairy industry prepares for the transfer of its core br 3_news.4_web_news.air

eeding database from the Livestock Improvement Corporation (LIC) to DairyNZ.

MPI said it needs to decide whether it’s appropriate to continue regulating LIC once that’s happened.

LIC chief executive Wayne McNee said its farmer owners agree it’s time to do away with the restrictions. . .

Part A of WPC Ministerial Inquiry initiated:

Primary Industries Minister Nathan Guy and Food Safety Minister Nikki Kaye said today that the final part (Part A) of the Government Inquiry into the Whey Protein Concentrate (WPC) Contamination Incident will begin on 12 May.

“Part A will examine how the potentially contaminated whey protein concentrate entered the New Zealand international markets and how this was subsequently addressed,” Mr Guy says.

“Part A could not begin until the Ministry for Primary Industries (MPI) compliance investigation was complete, sentencing had occurred, and the appeal period had expired.

“Inquiry Chair Miriam Dean QC has been conducting preliminary work with the Department of Internal Affairs on a suitable date to begin the inquiry to ensure availability of other inquiry members and that a secretariat is available,” Ms Kaye says. . . .

Black beetle numbers on the rise:

AgResearch scientists warn that one more mild winter could result in a population explosion of black beetle.
 
“Recent AgResearch trial work shows that black beetle populations are on the increase and development is more advanced in autumn 2014 than in the previous five years,” says AgResearch Science Team Leader Biocontrol and Biosecurity Dr Alison Popay.
​“This means that the adult black beetles will have plenty of time to feed and build up fat reserves to help them through the winter.  If warm conditions continue through autumn and spring conditions are right, some farmers could be facing another serious black beetle outbreak next summer.” . . .

 

Food and beverage sector driving growth:

New Zealand’s food and beverage industry is well positioned for substantial growth, with exports on track to double in value in the next 15 years to US$40 billion, according to reports released today.

Economic Development Minister Steven Joyce today released the 2014 edition of the Investors’ Guide to the New Zealand Food and Beverage Industry. The Investors Guide showcases the key factors driving New Zealand’s food exporting success: high-quality ingredients, disease-free status, comprehensive network of free trade agreements, world-leading business environment, and strong food science capability.

“The Investors Guide shows significant investment and acquisition activity which indicates a dynamic and growing industry, and we are seeing the results in export performance,” Mr Joyce says. . .

Timber products exported without chemicals:

Associate Primary Industries Minister Jo Goodhew is welcoming the expansion of a trial which has successfully exported timber products to Australia without chemical treatment.

“Forest product exporters are normally required to fumigate with methyl bromide or other chemical treatment during the summer flight season of the burnt pine longhorn beetle,” says Mrs Goodhew.

“The non-chemical solution requires that inspected timber is either kept within an insect-proof environment until it is put in a container and sealed, or put in a container during daylight hours of the same day to avoid the nocturnal beetle. . . .


33 recommendaitons in independent review of contaminated whey protein

October 29, 2013

The independent inquiry into Fonterra’s contaminated whey protein concentrate has made 33 recommendations.

In a detailed report, the inquiry found that a number of factors, including a lack of senior oversight of crucial decisions, problems with tracing potentially affected product and belated escalation of the issue, contributed to the event in August this year. 

Speaking at the tabling of the inquiry report in Auckland today, Jack Hodder QC, who led the inquiry team, said: “Fonterra is a high quality organisation with talented and dedicated people. The WPC80 Precautionary Recall let them down. 

“There were shortcomings in a number of areas, which, compounded by a number of events and co-incidences, converged to create this significant issue. 

“Our findings and recommendations do not indicate any fundamental problems within Fonterra. That is not our conclusion. 

“They do point to a range of improvements Fonterra can make to become an even better company.“

The Chairman of the special oversight committee for the inquiry, also an independent Fonterra director, Sir Ralph Norris, said his committee “endorsed the key recommendations and themes identified by the inquiry team… It has undertaken a thorough, consultative, independent and incisive analysis.”

The inquiry team was led by a legal team from Chapman Tripp, co-ordinated by senior partner Jack Hodder, QC, and independent experts Gabrielle Trainor, a Sydney-based specialist in crisis management and communication, and international dairy consultant, Jacob Heida of the Netherlands.

 “The inquiry team recognises that Fonterra is well advanced on a journey from being a cost-focused dairy ingredients producer to being a customer-focused global foods products supplier that is second to none in its aspirations, standards and people.

“Some areas of weakness have been highlighted, and this has created the opportunity for Fonterra to further strengthen it processes, culture and governance. 

“Acting on the recommendations made will lead to Fonterra becoming even more responsive to the global expectations of excellence in food safety and quality, and engaging more comprehensively with stakeholders.

“The findings and recommendations are important foundations for Fonterra’s continued success.”

 The Chairman of Fonterra, John Wilson, told the media briefing that the board of Fonterra was fully committed to implementing the recommendations made.

“What directors found encouraging is that this Independent report to the Directors has a significant degree of overlap with management’s Operational Review, which was made public last month.

“There are no contradictions between the two sets of recommendations.

“Much of the recommended change is already underway, or has already been identified as needing to be changed.

“We are committed to adopting a ‘best of class’ philosophy around food safety and incorporating the latest, world class methods into every facet of our operations.”

He said the board had also committed to the reconvening of the Independent Inquiry Committee in 9 months, and again in 18 months, to assist the board in reviewing the progress that has been made against the recommendations.

In an email to shareholders, Fonterra chair John Wilson said:

  • There are 33 recommendations, 24 relating to operational issues and many of them overlap with management’s operational review findings.
  • We asked the inquiry team to challenge every aspect of the business to find out what happened and why, to reduce the chance of this ever happening again and to make our Co-operative stronger.
  • It finds Fonterra does most things extremely well and the report says we are “already operating at a high quality level in almost all respects”.
  • The crisis was complex involving many customers, many countries, languages and cultures.  It was on a scale most companies never face.
  • Problems escalated because senior management and the Board were left out of the loop too long and we lost time needed to get an effective plan in place.
  • A change in computer systems compounded difficulty in obtaining accurate information.
  • The report is thorough and the Board accepts its findings and recommendations.

Here is the summary of the findings and recommendations from the report:-

Primary findings of what happened

  1. Fonterra did not include any sulphite reducing clostridia (SRC) tests for any of its production of WPC, even though it had accepted SRC tests under at least one contract with a major customer.
  2. Some errors of judgement were made in preparation for the reworking process applied to the relevant WPC80 batches.
  3. The standard pre-start up automatic cleaning regimes used by Fonterra plants required improvement.
  4. There was insufficient senior oversight of the crucial decision to engage AgResearch to test for C. botulinum.
  5. The commissioning, design and limits of the C. botulinum testing were inadequate.
  6. Fonterra was unable to promptly and definitively track the destinations of the affected WPC80.
  7. There was only belated recognition (and delayed escalation to senior management and the Board) of the explosive reputational risk involved – a failure to “join the dots” between a) C. botulinum b) infant food products c) consumer sensitivities and d) Fonterra’s global reputation.
  8. Fonterra’s crisis management planning, including the external communications aspects, was inadequate for a crisis of this kind and scale.
  9. Fonterra management of the crisis in the critical early period, including the external communications aspects, was not well executed.
  10. There was some lack of alignment and confidence between Fonterra and the New Zealand Government in the critical fortnight after the contamination concerns were advised to the Government and made public.

Principal operational recommendations

  1. Fonterra’s food quality and safety specifications and testing be reviewed to ensure they are “best in class” standard: consistent with the most rigorous requirements of customers, and with international best practice.
  2. Risk management and crisis management processes be strengthened, including by establishment of a specially trained and multi-disciplinary (but not full-time) Incident Management Team and regular relevant training, global best practice product tracing systems, and a new Risk Committee of the Board.
  3. Reputational risk assessment form part of the criteria for escalation and assessment of non-standard external scientific tests.
  4. Plant cleaning programmes be amended.
  5. There be continued building of a directly-employed strong, specialist and experienced communications team, including in key global markets, supplemented with contracted high calibre local expertise where appropriate.
  6. There be enhanced and sustained efforts to address a “Fortress Fonterra” perception held by a material proportion of key stakeholders, by Fonterra redefining the style and substance of its engagement with them.
  7. The Inquiry be reconvened after 9 months and again after 18 months to review Fonterra’s progress on those recommendations.
  • The report notes that the recommendations are “essentially in the nature of incremental improvements and consistent with Fonterra’s pre-existing commitments to both food quality and safety and to continuous improvement.”
  • On the operational side, we will have a specific focus in relation to the re-working process, risk management, testing for contaminants, cleaning processes at our plants, escalation of problems, operational planning, and communications.
  • The Board will split out a specific Risk Committee from the current Audit, Finance and Risk Committee to provide a separate emphasis on managing risk across Fonterra, providing an overview to ensure our management team continues to improve our processes, monitoring and risk escalation right through our Co-operative.
  • Our priorities are to ensure the operational review is completed, the independent inquiry team’s recommendations are acted on, and that future crisis management is “best in class”.
  • Most importantly, we must take all stakeholders with us and make those relationships stronger.
  • I have huge confidence we will build on our world class reputation for food safety and quality.

The executive summary starts by pointing out:

. . . any major inquiry will tend to accentuate a few negative considerations. This tendency requires a balancing reminder about the many positive considerations – here including the impressive quality of Fonterra’s people and plants, and its pre-existing commitments to food safety and quality and continuous improvement across the organisation.

This is a reminder that although lots of things went wrong and the subsequent reaction was handled badly, the company itself gets most things right.

The report’s brief was to determine what went wrong and what needs to be done to avoid it happening again.

It has done that and it is up to Fonterra to act on the recommendations to do everything it can to prevent any further food safety issues and to ensure it is prepared to respond if, or when, there is a problem in the future.

The full report is here.

The government is undertaking a ministerial inquiry and the Ministry of Primary Industries is doing a compliance investigation, both of which are expected to be completed by the end of the year.

 

 


Fonterra scare false alarm

August 28, 2013

The Ministry for Primary Industries says 195 tests here and in the USA have shown the Fonterra botulism scare was a false alarm.

The Ministry for Primary Industries has received results confirming that the bacteria found in the whey protein concentrate (WPC) manufactured by Fonterra is not Clostridium botulinum. The organism is confirmed as Clostridium sporogenes. It is therefore not capable of producing botulism causing toxins.

There are no known food safety issues associated with Clostridium sporogenes, although at elevated levels certain strains may be associated with food spoilage.

“When MPI received information from Fonterra on 2 August that it had detected Clostridium botulinum in some of its products, I immediately adopted a precautionary approach to protect consumers both here and overseas,” acting director-general Scott Gallacher said today.

“We needed to act on what we knew at that time. The information we had then said there was a food safety risk to consumers and we moved quickly to address it.”

At the same time, MPI commissioned a further array of tests to validate the initial results Fonterra reported. A total of 195 tests using a range of technologies have been conducted in laboratories here and in the USA. Results from the most definitive of these tests arrived over night, and were assessed with appropriate technical advice on hand today.

“We sought additional testing at both local and international laboratories, seeking the most robust results we could get. Scientists used a range of methods – all came back negative for Clostridium botulinum,” said Mr. Gallacher.

“MPI has today informed overseas regulators of these results, and we will be providing them with a full diagnostic report shortly. I will also be revoking my Director-General’s statement, issued under the Food and Animal Products Acts, about this issue.”

A failure of hygiene during processing remains a concern for customers incorporating WPC into their products. However, the concern primarily relates to quality and the potential for spoilage when used in foods that support growth of Clostridium sporogenes from spores.

The scare was a false alarm but it was a wake up call to not just Fonterra but everyone who depends on our reputation for high quality, safe food.

We can not afford to be complacent.

If we want to trade on our reputation we must ensure that it is matched by the highest possible standards in what we do and how we do it.


Fonterra adds expertise to inquiry panel

August 15, 2013

Fonterra has added more expertise to the panel inquiring in to the contaminated whey protein concentrate.

An independent inquiry into the circumstances of quality issues with a whey protein concentrate (WPC80), announced by Fonterra’s Board early this week, is now underway.

Inquiry Chairman and Fonterra Independent Director Sir Ralph Norris said the first Inquiry Committee meeting held yesterday had confirmed terms of reference for the Inquiry and noted the appointment by the Fonterra Board of a further independent member – Professor Stuart McCutcheon, Vice Chancellor of the University of Auckland – who will join the Committee, effective immediately.

“Professor McCutcheon is a respected New Zealander whose independence, strong credentials as a scientist, and governance experience will further ensure the Inquiry is conducted at the right level and addresses the right questions without fear or favour,” Sir Ralph said.

Professor McCutcheon holds a PhD, has completed post-doctoral work as a Harkness fellow at Cornell University and published extensively in the fields of endocrinology and metabolic physiology. He is a previous Director of the New Zealand Dairy Research Institute, the Malaghan Institute of Medical Research and is presently Chair of the Universities New Zealand Research Committee.

Professor McCutcheon joins retired High Court Judge Dame Judith Potter as the two independent members on the committee, alongside five Fonterra Directors, and Chapman Tripp QC, Jack Hodder, who is undertaking a review of events for the committee.

To assist with technical aspects of this review the WPC80 Inquiry Committee has also confirmed the appointment of an international expert on the manufacturing and safety of foods and food components. He is Jacob Heida, an expert in whey production processes and standards for infant food ingredients and current member of the Disciplinary Committee of the Netherlands Controlling Authority for Milk and Milk Products. . .

This is a high-powered and well qualified group and it needs to be to reassure shareholders, customers and the public.

The inquiry is expected to take about six weeks.


Fonterra caught by non-tariff barriers

August 14, 2013

Russia, Belarus and Kazakhstan have banned products from most Fonterra plants .

Trade Minister Tim Groser’s office today confirmed the three former Soviet states had banned all Fonterra dairy products, despite none of the potentially affected product being shipped there.

Dairy exports in the three countries are worth $133 million a year.

Primary Industries Minister Nathan Guy said officials were working to rectify the ban.

“We’ve got our ambassador from Moscow working around the clock with Russian authorities to provide them with the information they are demanding,” he said. . .

Fonterra confirmed it sent none of the potentially affected why protein concentrate (WPC80) to these countries and no Fonterra products sent there used the affected WPC80 as an ingredient. . .

This is a non-tariff barrier.

It’s almost certain that Sri Lanka’s recall of Fonterra products is too.

Sri Lankan test results for agricultural chemical Dicyandiamide in Fonterra milk products were “off the charts” in comparison to other “extensive” testing according to New Zealand Prime Minister John Key.
 
Officials in Colombo have ordered a recall after they say DCD, a nitrate inhibitor used in fertiliser, was found in two batches of imported milk powder.

Fonterra disputes DCD traces were present in the product in Sri Lanka and says testing regimes are flawed. . .

This is disappointing when so much effort has been put into getting a toe-hold in these markets but non-tariff barriers can be just as difficult to combat as blatant protectionism.

 


Rural round-up

August 10, 2013

Fonterra Confirms No Health Risk with High School Project:

Fonterra today confirmed that there is no health risk to students at Palmerston North Girls’ High School who drank drinks that included whey protein concentrate (WPC80) from a batch subsequently subject to the recent precautionary recall.

Fonterra visited the school today to work with the principal and teachers as they informed students and parents about the whey protein concentrate provided to the school. The Ministry of Education and the Ministry of Health have also been involved in supporting the school.

Fonterra Chief Technology Officer Dr Jeremy Hill said Fonterra established last night that a small portion of some potentially affected whey protein concentrate was provided to the school in February 2013. . .

Landcorp 2013 profit probably higher than forecast as it mitigates drought impact – Tina Morrison:

Landcorp Farming, New Zealand’s biggest farmer, says earnings may be a smidgen higher than first budgeted after initially thinking it may only breakeven this year when drought hit milk production and livestock price.

Net operating profit was probably $13 million in the year ended June 30, compared with its original budget of $12.7 million and down from $27 million the year earlier, state-owned Landcorp said in a statement

In January, the company, which operates 119 properties, cut its earnings expectations to between $6 million and $8 million and in March said it may only breakeven as the worst drought in 70 years crimped production and hit prices. . . .

New salmon farms get the go ahead:

New Zealand King Salmon got the go ahead yesterday for four new salmon farms in the Marlborough Sounds, when two appeals to the High Court were completely dismissed.

New Zealand King Salmon CEO Grant Rosewarne says he and his team are extremely relieved. He says “I am hugely proud of my team, and their absolute commitment through what has been an exhausting process. But we’re very excited and eager to get on with the business of producing the world’s best salmon”.

Once operational, the four new farms will create about 200 new jobs in the Top of the South, and benefits will start to flow through wages and additional work for local suppliers such as water taxis, engineering firms, transport companies and local shops. . .

Government welcomes King Salmon decision:

Conservation Minister Dr Nick Smith and Primary Industries Minister Nathan Guy have welcomed the High Court’s decision to dismiss two appeals on the Board of Inquiry’s approval for New Zealand King Salmon to develop new marine farms in the Marlborough Sounds.

The decision of the Board of Inquiry, reached in February 2011, to approve four new salmon farming sites in the Marlborough Sounds was appealed by two parties and that appeal was heard at the High Court in Blenheim in May.

“The impacts of these new marine farms on the important recreation and conservation values of the Marlborough Sounds are small. This is about use of only six hectares of more than 100,000 hectares of water space in the Sounds,” Dr Smith says. . .

Sanford to miss forecast on lower skipjack tuna, toothfish and mussel harvest – Tina Morrison:

Sanford, New Zealand’s largest listed fishing company, said annual profit will fall short of its forecast after lower catches of skipjack tuna and toothfish and slow growth in its main Marlborough mussel growing area. The shares fell.

Profit will probably be $23 million to $25 million in the year ending Sept. 30, from $21 million last year, the Auckland-based company said in a statement. That’s less than Sanford forecast in May when it said second half profit would probably match the $14 million posted in the first half.

Sanford profits are being crimped as it faces high costs of operating its vessels while its catches fail to meet expectations in the Pacific skipjack tuna fishery and for toothfish in the remote South Georgia fishing zone. Slower growth in Marlborough mussels means those that are able to be harvested are generally smaller, resulting in lower revenue per kilogram and increased production costs. . .

Long haul to first consent for water scheme:

The company driving a large-scale irrigation and water storage scheme in North Canterbury hopes to have the initial stage operating in two or three years, now that it has got its first resource consent.

The $400 million scheme will take water mainly from the Hurunui River to irrigate up to 60,000 hectares of land on several hundred properties extending from north of the river to the coast. A series of dams will be built on a tributary of the Hurunui, the Waitohi, for water storage as well as hydro power.

Project manager Amanda Loeffen says it has been a long haul to get the first consent; initially the scheme wasn’t supported by everybody, and after a year and a half of discussions it has been completely redesigned. . .

Pins Colt Attracts Top Price at South Island Sale:

A striking colt by top-drawer stallion Pins has topped the New Zealand Bloodstock South Island Sale of Two-Year-Olds and Mixed Bloodstock, knocked down for $50,000.

Presented at Lot 29 from the draft of Phoenix Park, the colt is out of the 2005/06 New Zealand Bloodstock Southern Filly of the Year Series winner Ombre Rose and is bred on the Waikato Stud cross of Pins over O’Reilly that has proven successful in the past.

The hammer fell in favour of Joe Barnes of J & I Bloodstock Ltd, with the colt’s racing future likely to be in Hong Kong. . .


China admits breast is best

August 10, 2013

The breast is best message is wide spread in the west and any advertising of infant formula is careful not to suggest that it is superior to morhers’ milk.

But in China advertising of infant formula is aggressive .

However, the ill-wind of the contaminated whey protein concentrate has blown some good for Chinese babies – promotion of the benefits of breast feeding.

China’s rates of breast-feeding are among the world’s lowest. But health workers and the government are trying to revive the practice, and a drumbeat of safety scares over commercially produced milk is giving them new leverage. Visitors to Internet forums for new parents are posting comments about the benefits of breast-feeding and the potential hazards with formula.

“The risks of formula feeding are increasingly clear to the Chinese public,” Dr. Robert Scherpbier, chief of health and nutrition for UNICEF China, said in an email this week. His comment came after China’s government ordered a recall of formula imported from New Zealand because of contamination fears.

“How many infant formula crises do we still need to convince mothers and policy makers that breast is best?” Scherpbier said. . .

Some women choose not to breast feed, some who want to can’t. But some good will come out of the WPC contamination scare if more mothers who could, do.


Apology and explanation

August 8, 2013

Fonterra CEO Theo Spierings is back in New Zealand with an apology and an explanation:

Fonterra Chief Executive Theo Spierings today apologised for the anxiety caused over the past few days by the quality issue involving three batches of potentially affected whey protein concentrate (WPC80).

Mr Spierings briefed media in Auckland today about why Fonterra alerted regulatory authorities, customers and the public about the product, and provided a detailed overview of what happened following its manufacture.

“I understand the anxiety this issue has caused over the past few days and I apologise for this, particularly to mums and dads around the world.

“Food safety and public health are the top priority for Fonterra, and all parents and consumers have the right to know that their products are safe.

“On Friday 2 August, after a period of extensive testing we concluded that we had a potential food safety risk. The tests showed that this risk was minute but, that it was a risk nonetheless.

“For this reason, we immediately informed the Ministry for Primary Industries, our customers and the public even though we did not have all the information about product location on hand. Our priority was to alert people to the potential risk as we continued to gather facts and, along with our customers, identify and contain affected products,” said Mr Spierings.

Over the past few days Fonterra, regulatory authorities and Fonterra’s eight customers have located and secured products that were not in the market, and where they had already reached retail shelves, initiated recalls.

“I appreciate the way our customers and their local regulators have worked so quickly with us. Their fast actions and commitment to safety have meant that almost all products are now secured – and we are in the final stages.”

Describing the low risk involved, Mr Spierings said that Clostridium botulinum needs to remain in an anaerobic environment to survive: “When exposed to oxygen, Clostridium botulinum does not survive and, for this reason, it is not commonly tested for in dairy manufacturing.

“The discovery of this particular form of Clostridium will be the subject of discussions with regulatory authorities and our own technologists about requirements for future testing regimes and quality regulations.”

Mr Spierings said Fonterra will be conducting a comprehensive internal investigation to fully understand what happened, both before and after the affected whey protein concentrate was manufactured.

“Our priority is to focus on dealing with the current situation, following which we will conduct an extensive audit into what happened and what can be done differently in the future.

“I believe Fonterra has acted in a responsible manner, with public health at the forefront of our minds throughout,” Mr Spierings said.

Had communication been this clear and full from the start there would have been a lot less anxiety.

The company is right to have public health at the forefront of its mind but that doesn’t exclude having a good public relations strategy too.

The media abhors a vacuum and if it isn’t getting the good oil from the prime source it will go drilling elsewhere.

Since the news of the contaminated whey broke I’ve read and heard interviews with all sorts of experts giving their views on what might have happened.

All left me with more questions.

Had Fonterra got its media strategy right from the start the answers would have been given before the questions were raised.


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