Fonterra says China trip 'very important week'

Fonterra chairman John Wilson. Photo / NZ Herald

Fonterra's chairman John Wilson says Prime Minister's John Key visit to China had been a "very important week for Fonterra" and its clients have welcomed its quick decision to accept the court charges laid against it.

However, smaller exporters say they are still feeling the strain.

Speaking to the Herald at the end of Key's visit to China to explain the response to the botulism scare, Wilson said some customers had discussed the charges laid against Fonterra, but had acknowledged the company accepted the charges promptly. "It is a mark of respect for the food safety systems of New Zealand. So there is discussion, but it's a very rapid discussion. There's an understanding of what has happened."

A number of other dairy exporters also travelled to China for the visit as concerns continue about how China's review of its infant formula import rules will end.

New Zealand Infant Formula Exporters Association chairman Michael Barnett said companies from other countries such as France, Australia and Europe had taken advantage of the situation to wedge their products in and claim good shelf space.

"They've been in and offered incentives to the buyers to be able to get shelf space. We have to earn that back and it's going to take time. I think what would be really good was if Fonterra looked at the collateral damage that the rest of the small to medium exporters have in respect of product coming into the China market."

Prime Minister John Key said he was not surprised smaller exporters were experiencing issues given the restrictions put in place after the botulism scare. He believed it was now working through those restrictions to see if they were still needed. While Fonterra was big enough to absorb changes, other companies would struggle.

China is trying to consolidate the number of brands of infant milk powder on the market, both domestic and imported.

Fresco Nutrition managing director Gregg Wycherley said while some smaller companies were suffering, weeding out was needed. The number of New Zealand brands had already shrunk from up to 300 down to about 30 in response to the restrictions. "If the brands that fell by the wayside weren't strong enough to survive this minor crisis, a false alarm, they were going to fall over anyway. It's survival of the fittest."

He said for the most part trust in New Zealand dairy was still strong. "In some ironic way, we got a bit of kudos for acting so strongly over what turned out to be a false alarm."

Wilson said Fonterra also welcomed the Government decision to boost the number of Foreign Affairs and Primary Industries staff in China, saying it was critical for the Government to provide such backing given the explosion in the China market since the free trade agreement was signed.