Editorial: Fonterra scare report leaves key questions unanswered

Jack Hodder QC independent inquiry team leader. Photo / Richard Robinson

Fonterra's botulism false alarm was a chapter of errors that simply should not be able to happen in a food manufacturer of its scale. The report of the inquiry commissioned by the Fonterra board has found nothing "fundamentally" wrong with the company's procedures, just "shortcomings in a number of areas", says the inquiry leader, Jack Hodder, QC.

His team has asked all the right questions except the fundamental one: why was the suspect whey protein not simply dumped? The inquiry reveals the batch was "reworked" to remove a known foreign body, fragments of plastic from a broken torch lens. The rework involved a "wetting" that was "not a normal operation for whey production and required some improvisation", it reports.

It required the use of a stainless-steel pipe and two hoses not normally used in the production process. This was the "dirty pipe", although the inquiry does not approve of that term. It accepts a colony of micro-organisms had survived two cleaning cycles and asks, does that indicate problems with Fonterra's approach to hygiene?

No, it concludes. "Fonterra's approach is consistent with what is expected of top quality food manufacturing operations internationally." The error of judgment, it says, was "a departure from appropriate risk management processes for the improvisations developed for the wet reworking process".

That, whatever it means, was the first error. The second, far more serious, occurred much later at the crown research institute AgResearch where the microbes were wrongly identified as clostridium botulinum, though the inquiry finds there was insufficient senior oversight of the decision to engage AgResearch.

With the false positive test result, Fonterra had to alert the Ministry for Primary Industries and set about a product recall. At that point the errors compounded. The company was unable to track the destination of the whey product quickly and definitively. It had not practised a crisis management plan. Its midnight announcement was ill-prepared and it failed to adequately emphasise that the recall was a precaution while further testing was done.

Most astonishing, the inquiry finds "there was only belated recognition of the explosive reputational risk involved - a failure to 'join the dots' between C. botulinum, infant food products, consumer sensitivities and Fonterra's global reputation".

More delicately, the inquiry notes "some lack of alignment and confidence between Fonterra and the Government" in the critical fortnight after the public announcement. Ministers Steven Joyce and Tim Groser made the Government's frustration fairly clear. Is the inquiry hinting Fonterra was frustrated by the Government's performance?

It is reasonable to ask whether heavy-handed intervention involving direct alerts to foreign governments made the recall more damaging than it needed to be. That is not a question the inquiries under way for the Government are likely to answer when they report in the next month or two. The board's inquiry has been a missed opportunity for the Government's role to be critically reviewed.

The lessons the inquiry draws are obvious: Fonterra's food safety procedures and testing must be "best in class", its risk and crisis communications must be improved and plant cleaning programmes amended.

It also wants the risk to its reputation to be considered when non-standard external scientific tests are sought. The costly error at AgResearch remains unexplained. Maybe the next inquiry will nail it.