Fonterra down the track in boosting food safety after last year's recall
By Paul McBeth
Sep. 3 (BusinessDesk) - Fonterra Cooperative Group, the world's biggest dairy exporter, is on track in lifting the
quality of its food safety processes, nine months after an independent review into its handling of last year's false
alarm food scare.
The Auckland-based company has completed audits of 75 percent of its plants globally and has embarked on necessary
improvements and maintenance where needed, put in place protocols to engage external scientific and diagnostic resources
and written food and safety quality into all senior management employment contracts, it said in a statement. It's also
set up an incident management team, created a food safety and quality council, and appointed Greg McCullough as head of
food safety and quality.
The update marks the first nine-month review since a board-ordered independent report, with another review scheduled in
nine months.
"The committee was unanimous in its view that Fonterra management has brought a clear focus to rectifying the areas of
weakness identified last year during the inquiry," independent inquiry committee chair and Fonterra director Ralph
Norris said. "It was particularly pleasing to see evidence of the holistic and disciplined approach being taken to
implementing changes that will further strengthen the cooperative."
The progress zeroes in on the report's top operational recommendations to ensure Fonterra's food quality and safety
specifications and testing were reviewed to ensure they were 'best in class' and consistent with the most rigorous needs
of customers, and that risk and crisis management processes were bolstered, something Norris said at the time of the
report would include the creation of a separate board committee focusing on risk.
The update doesn't touch on the report's recommendation to address the perception of a "fortress" mentality at Fonterra,
where a "material proportion" of stakeholders saw a lack of responsiveness by the company when the botulism scare
unfolded.
Last August, Fonterra quarantined several batches of whey protein concentrate amid fears it was contaminated with a
potentially dangerous form of the clostridium bacteria. The whey protein was ultimately cleared as a false alarm.
Fonterra cut deals with seven of the eight customers affected and recognised a contingent liability of just $14 million
for the recall in its accounts.
French food giant Danone is suing Fonterra over the food scare, claiming damages for the costs of recall, loss of
profits, and loss of business and reputation, alleging lost sales of 350 million euros and projecting cost impacts of
280 million euros.
The scare did little to hose down demand for Fonterra's products, and the dairy company last week announced plans to buy
a 20 percent stake in China's Beingmate Baby & Child Food, and set up a joint venture with the Chinese firm to supply infant formula into the world's most populous
nation.
Units in the Fonterra Shareholders' Fund, which gives investors exposure to Fonterra's dividend stream, were unchanged
at $6.15 today, and have gained 6 percent this year.
(BusinessDesk)