New Zealand's 'Clean and Green' myth

Complacency is New Zealand's national disease.

Here is some reaction from international media.

New Zealand milk scare dents China's belief in foreign brands

A botulism scare has soured China’s taste for New Zealand milk powder that amassed big sales on a reputation for purity, but consumers even more wary of their own country’s dairy industry likely won’t eschew the foreign product for long.

South China Morning Post,

6 August, 2013

China’s dairy business has long been beset by quality lapses and criminal scams, the most infamous in 2008 when six babies died and hundreds of thousands were sickened by infant formula contaminated with a chemical added to mask that the product had been watered down.

The current food scare created by New Zealand’s largest company, Fonterra, stems from a dirty pipe in one of its plants last year, which led to a contamination of whey protein concentrate that could cause botulism.

While this has worried Chinese consumers who have been willing to pay a premium for foreign brands they believe are safer, school teacher Zhu Danyan said the current case is different from what happened in 2008.

“In this case, the producer did not mean to hurt babies. They made a mistake in their work,” she said. The earlier scandal in China was “more serious and unforgivable,” Zhu said. “They knew what they are doing. They just wanted to make money.”

While angry at Fonterra for taking several months to identify the contamination problem, Zhu said she wouldn’t switch to Chinese milk for her six-week-old baby. “I just have no sense of confidence in Chinese milk.”

Fonterra, the world’s largest dairy exporter, announced on Saturday that hundreds of tons of infant formula, sports drinks and other products sold in seven countries could be tainted. The scare prompted China and Russia to stop importing some Fonterra products, according to New Zealand officials and the company.

China’s General Administration of Quality Supervision, Inspection and Quarantine ordered officials to “step up supervision” of dairy products from New Zealand. On Tuesday, Sri Lanka’s health ministry ordered all milk products imported from New Zealand stopped at ports and the withdrawal of whey protein products from supermarkets as a precaution.

China’s state media have jumped on the scare, saying “even famous foreign brands can’t always be reliable.” “Some Chinese consumers have expected ‘absolute safety’ of foreign brands,” wrote the People’s Daily, the mouthpiece of the ruling Communist Party, on Tuesday.

Fonterra has stressed there have been no reports of anyone being sickened and that it has been open in dealing with the contamination.

“We decided to be fully transparent with the market and to go out straight after we found it on the 31st of July although we did not have all the answers available at that time,” Fonterra’s chief executive Theo Spierings told a news conference on Monday in Beijing, where he also apologised for any distress caused.

China’s thirst for quality milk made it New Zealand’s top export market for the first time in the first quarter of this year, overtaking Australia which had long been its neighbour’s biggest market. China slipped back behind Australia in the second quarter, the offseason for dairy products. New Zealand’s dairy exports were worth US$13.4 billion (HK$103.9 billion) in the year to June this year. Of that, dairy trade to China was worth US$3.17 billion.

While there may be a short-term decline in sales of milk products with New Zealand ingredients, “the market will ultimately recover,” said David Mahon, managing director of Mahon China Investment Management, a Beijing research and investment advisory firm.

Some parents may take comfort that no one was sickened and “at least there was an act of transparency here,” he said. “Frankly some will have no choice but to go back to the brand they have been using because a Chinese brand in their minds may not be a better alternative, but if there are other brands, a Dutch brand, a South Korean brand, and they can secure it, they will.”

Since the 2008 formula scandal, China’s milk testing standards have begun to improve and domestic companies that produce infant formula are increasingly required to become accountable for the entire supply chain, said Mahon. A dairy farmer and a milk salesman were executed and 19 other people were jailed for their role in adding melamine, an industrial chemical, to diluted dairy products to make protein counts appear normal.

However, Chinese parents with enough money have largely shunned local brands since 2008.

Foreign brands’ market share was 30 per cent in 2008 and more than 50 per cent last year, while it was 70 per cent in the high-end milk powder market, according to a domestic media report citing the China Chamber of Commerce of Foodstuffs and Native Produce.

In March, Hong Kong’s government enacted measures to restrict the amount of baby formula individuals could take out of the city to two cans after supermarket shelves were emptied by mainland Chinese visitors. Even retailers in Britain and Germany and elsewhere in Europe limited purchases of baby formula earlier this year to prevent customers from bulk-buying and exporting it to China for profit.

New Zealand's Environment-Friendly Image Marred By Dairy Contamination

Huffington Post,

August,2013

WELLINGTON/SYDNEY, Aug 6 (Reuters) - For a country that markets itself to the world with the slogan "100% Pure", New Zealand's environmental credentials are not as impeccable as many would think.

The majority of its rivers are too polluted to swim in. Its record on preservation of natural environments is among the worst in the world on a per capita basis. And it is the only OECD country that does not produce a regular national report on its environment.

The discovery by dairy giant Fonterra of a bacteria that can cause potentially fatal food poisoning in ingredients sold to eight countries exposes New Zealand's vulnerability to food safety scares and the fragility of the clean, green image underpinning its farming- and tourism-based economy.

Agricultural exports, including dairy, meat, fruit and wine, command high premiums internationally thanks to New Zealand's reputation as a producer of safe, natural and high-quality food.

"It was only a matter of time before our dirty little secret came out," said Jill Brinsdon, brand strategist at Radiation, a brand agency in Auckland.

"Fonterra is our largest exporter and they're completely intertwined with New Zealand's image and also they're the absolute biggest benefactor of the '100% Pure' brand. When you're coming out with something that presents itself as fact, or 100% pure, then you have to be 100% pure and we've proven that we're not."

PURE?

New Zealand's primary sector, which includes fishing and forestry, accounts for some 60 percent of exports and 18 percent of the country's $160 billion GDP, among the highest proportions in the developed world. Tourism makes up another 10 percent or so of GDP.

The country has long marketed itself internationally with the "100% Pure" slogan in print and TV ads, drawing millions of visitors each year to experience its national parks, beaches and lakes. With barely 4.5 million people spread over a mountainous area larger than the United Kingdom or California and more than a quarter of that set aside for reserves and national parks - the backdrop for the popular Lord of the Rings movie trilogy - New Zealand has no shortage of unspoilt natural attractions.

But the marketing overlooks a dark side to the country's environmental credentials.

More than 60 percent of New Zealand rivers monitored by the Environment Ministry had "poor" or "very poor" water quality and were rated as unsafe for swimming due to pollution.

Dairy farming, which has a lot riding on New Zealand's strong environmental reputation, has been a significant cause of poor river quality due to fertiliser and effluent runoff. Unlike many other countries, New Zealand cows are kept on grassy pastures year-round, a major selling point for its $9 billion annual global dairy trade.

"Because we've had a lack of regulation on farm waste for 20 years it's been a free for all, so farmers have done what they can to produce more milk - which is to put more cows on pastures," said Mike Joy, an ecology and environmental sustainability scientist at Massey University.

Prime Minister John Key, who has been previously criticised for saying the 100% pure marketing should be taken with a pinch of salt, said New Zealand would always be reliant on dairying, with its natural competitive advantage and global demand rising.

"The right answer is not for New Zealand to sell less dairy. The right answer is for New Zealand to be absolutely sure that the safety standards are met," he said on Tuesday.

FOOD SAFETY

While separate from its environmental credentials, New Zealand's food safety record is also not without stain.

Until the late 2000s, New Zealand had the highest rate in the developed world of food-borne campylobacteriosis, a serious and sometimes deadly disease caused by a bacteria often found in uncooked chicken.

By 2011, even after a major government initiative to control the epidemic, New Zealand still reported incidents of the disease at more than double the rate of nearby Australia and 12 times the rate of the United States, according to the University of Otago.

The botulism scare at Fonterra was the company's second contamination issue this year after it earlier found traces of dicyandiamde, a potentially toxic chemical, in some products.

Even so, New Zealand has one of the most stringent food safety regimes in the world and the recent dairy product scares only turned up with the sophisticated and sensitive testing available.

Fonterra expects the current contamination issue to be resolved within days.

A protracted, major animal health incident, rather than a localised contamination issue, could wreak havoc on the New Zealand economy.

A decade ago, at the height of a foot and mouth epidemic in Europe, the Reserve Bank of New Zealand modelled the impact of a limited outbreak of the livestock disease - estimating an immediate 20 percent hit to the currency, as well as a 12 percent fall in exports and an 8 percent hit to GDP in two years.

"We've got to wake up and look more closely at our green credentials, and work harder to create a pristine environment so consumers can get a product which matches the story," said a consultant to New Zealand companies operating in Asia.

"We can't be complacent."

Here is some very good commentary from a Chinese perspective

Calls for heads to roll over Fonterra contamination scare

With market commentator Arthur Lim.