Fonterra - the deepening crisis

In the news this evening is this editorial from the People's Daily (not, by the way, Xinhua which is a news agency).

Instead of looking seriously at what the Chinese are saying and coming out with a fulsome apology Key has hit back, saying the Chinese 'misunderstand' the '100 % pure' policy – thus ensuring that what amounts of a humungus cock-up by Fonterra is made worse by a government that doesn't know the meaning of the word humility.

The 100 % pure, “clean and green image” is just that – an image – more accurately a mirage.

When it comes down to this all about corporate greed, a greed that is willing to sacrifice New Zealand's rivers and lakes for the sake of the latest export deal.

Commentary: New Zealand needs to start building trust in the long-term

the People's Daily,

5 August, 2013

WELLINGTON, August 5 (Xinhua) -- "A high quality free trade agreement" the term has been a catchphrase of New Zealand ministers in recent administrations when they talk of overseas trade.

But with yet another trade imbroglio, this one Fonterra's botulism scare, surely it's time to ask the New Zealand government: "Where's the quality control?"

Fonterra might have come away with some credit had it moved quickly to isolate the affected produce and implement a recall, but when such a problem takes more than a year to come to light, it's elevated from an industry event to a national issue.

New Zealand Trade Minister Tim Groser has promised "a thorough investigation," and surely one of the first questions must be why Fonterra apparently felt no legal onus to inform the public and the authorities sooner?

After another communications failure over chemical residues from the fertilizer dicyandiamide (DCD) in dairy products and the certification problems that saw New Zealand meat sitting on Chinese wharves earlier this year, Groser told Televison New Zealand in June: "The more you trade, the more likely it is that things will go wrong in terms of the detail."

But New Zealand's problems aren't mere "details" they're starting to look systemic.

One could argue the country is hostage to a blinkered devotion to laissez-faire market ideology. Many New Zealanders fell victim to this when the construction industry was deregulated two decades ago resulting in damp and leaky homes that quickly became uninhabitable.

While it's true the government isn't responsible for the contamination of Fonterra produce, it should be held accountable for the fact that nothing was done to identify the problem before it was dispatched to export markets and domestic customers.

However, to blame the succession of trade fiascos solely on free-market naivety would be charitable.

New Zealand Federated Farmers President Bruce Wills came closest to identifying the underlying problems when he said Friday: "The need is for government departments, educators and exporters, as well as farmers, to understand our customers. We need to understand their systems and ways of doing things a lot better than we currently do."

To start with, that means defining a "high quality" trade. Too often New Zealand's government appears to lay siege to perceived trade barriers, battering bluntly away until the doors swing open. And once open, it's open slather for those who can throw as much produce at the new market as possible.

Witness the infant formula industry. Possibly the authorities felt no obligation to register the industry's exporters for so long because of the dearth of actual New Zealand-owned producers.

Reports in the Chinese media of products being rejected and some of the dubious labelling finally prompted the New Zealand government in June to set up a brand register.

That China also requested brand information be included on export certificates was no surprise either, as the New Zealand government, which makes a great show of disdaining regulation at home, seems quite happy to let others regulate for it abroad.

New Zealand Prime Minister John Key made that plain during his official visit to China in April, when he attempted to tackle a niggling controversy over foreigners buying New Zealand land and property.

It followed a heated public debate over Shanghai Pengxin's long court battle to purchase 16 North Island dairy farms.

The constant push for exports and foreign investment stems, New Zealanders are told, from the country's desperate need for inward capital, but rather than lay down standards and principles to build trust, the government appears to adopt the quality-free rationale of the foreign trade: sell in bulk while the window is open and move on to the next deal.

The country is set to become a major supplier of quality food to the growing Asian market, New Zealanders are told. In June, Economic Development Minister Steven Joyce said New Zealand could become a "fruit bowl for Asia."

Those visions can only be built on trust and trust comes from regulatory systems that work, as China and Fonterra found with the Sanlu melamine scandal in 2008.

Glib assurances that the problems are "details" or that they are a sign that New Zealand is a "victim of its own success" in trade just don't cut it.

The glibness is stalking other aspects of New Zealand's foreign trade, with the country's "100 Percent Pure" tourism campaign becoming a festering sore as experts claim that the country might not in fact be "100 percent pure."

John Key, who also serves as tourism minister, defended the campaign in April: "It's like saying 'McDonald's, I'm loving it' - I'm not sure every moment that someone's eating McDonald's they're loving it ... it's the same thing with 100 Percent Pure. It's got to be taken with a bit of a pinch of salt."

No, Mr Key, it needs to be fixed before your trading partners just stop "loving it."


Perceptions - From the China South Morning Herald (Hong Kong):

Here is discussion on Radio New Zealand. 

Predictably, no one from government would front up and comment - Grosser must have made himself available at the last minute.