That Powder Problem that Won’t Go AwayFriday, Jan 11, 2002
The questionable milk powder export activities of the pre Fonterra operations of NZDG and Kiwi continues
to rumble along despite Mr Roadley’s attempt to rule a line under the event by ensuring that
a couple of executives were dismissed.
By routing product through Australia, it appears that sales could be made anywhere in the world without
the direct overview of the Dairy Board. But, it seems that the products arrived at their destinations
with documentation at variance with the branding – a no no in international trade.
While the volume of product that has made its way through this channel is small relative to the total
volume of NZ products exported and the companies have done their best to ensure that misdemeanour
should be seen as an aberration caused by a couple of over enthusiastic executives the problem seems
to be slow at fading away.
Recent overseas reports of an errant shipment of NZ produced powder to Italy being brought to the attention
of EU officials must be a worry to the NZ dairy industry.
It may have been small comfort that this powder problem was originally identified in Mexico, a country
with only modest clout in international trade but its spread, now, to the EU has much more sinister
implications from the point of view of possible trade disciplines or retaliations from our important
quota market in Europe.
Fonterra seems to have been unable to slip out from under the black mark created by some NZ dairy industry
players before its formation. It may be that the old NZ Dairy Board was an aloof, stuffy and
unmoved trader in dairy products on behalf of NZ producers but at least it maintained a reputation
of integrity and trading ethics that was seldom questioned.
The executives those companies whose judgement errors oversaw the deliberate flouting of NZ’s export
laws may not have been distanced far enough from the new structure of Fonterra.
The shareholders and directors of Fonterra may yet have to face up to consequences for the slow reaction
both by the industry and government agencies to a problem that while quite small in value terms
may become very large in lost reputation terms.