Fonterra's response to a health scare affecting baby milk formula around the world reads like a textbook on how not to manage a crisis. Geoff Cumming examines what went wrong

John Key's Cabinet must ensure an independent inquiry is held into the latest food safety scare to envelope the company that prides itself on being our national champion.

Questions remain over the status of potentially contaminated Karicare infant formula sold through unofficial channels in China, despite Fonterra's assertions that all products affected by its botulism scare have been contained.

British news website Daily Mail Online says New Zealand's claims to be clean and green are "pure manure".

Fonterra has admitted sending potentially contaminated whey protein concentrate to a high school after it was requested for a science project late last year.

The head of Federated Farmers has apologised to Chinese dairy consumers over Fonterra's botulism scare.

The Government has repeated its vow to hold an investigation into Fonterra after a "frank and thorough" meeting with executives at the Beehive.

Fonterra chairman John Wilson said yesterday he was "deeply concerned" by the infant formula contamination scare.

Helplines are still being flooded with queries from thousands of concerned parents following Fonterra's infant milk contamination scandal.

Kiwi baby formula companies are having orders cancelled in China and contract negotiations with Chinese customers terminated.

Public relations sharks are circling Fonterra and what is believed to be New Zealand's biggest image handling contract.

Roughly 70 per cent of NZ exports come from primary industries, writes Toby Manhire. Fonterra alone is about 10 per cent of the economy. When the sector sneezes, the country catches cold.

Fonterra's board will conduct a "full, thorough, formal review'' into the handling of the infant formula contamination scandal, says the Fonterra chairman.

Fonterra chief executive Theo Spierings has apologised to New Zealand but this is just the start and he will need to do more, writes Liam Dann.

"Was the Fonterra milk scandal caused by New Zealand being 'hostage to a blinkered devotion to laissez-faire market ideology'?" asks Bryce Edwards.

More than 80,000 cans of suspect infant formula have been recalled in Hong Kong and a hotline set up by the city's authorities has been fielding hundreds of calls.

Fonterra head Theo Spierings - just back from China - delivers an apology to NZ over the formula scare, but dodges questions about his own performance.

Fonterra chief executive Theo Spierings reckons Fonterra's reputation will be fully restored in the Chinese market.

Fonterra's infant formula scare appeared to have little impact on dairy prices.

Fonterra's chief apologised to consumers and the New Zealand public at a press conference today, saying all contaminated stock had been contained.

Fonterra said it had been fined $900,000 following the conclusion of a review by Chinese authorities into the pricing of dairy products in the people's republic.

International dairy prices made a "modest" fall at the first global dairy auction to be held in the aftermath of the Fonterra infant formula scare.

"Their inability to tell us with confidence that our two babies will not fall ill from any of its products ... is unforgivable."

"If there's a dent to that reputation that dent has the potential to hurt everybody ... " Tourism Industry Association chief Martin Snedden's blunt message.