Carmel Fisher - Key lessons from the Fonterra milk powder contamination

You’ve heard the proverb about one bad apple, well it seems that this week one contaminated pipe spoiled New Zealand’s entire “clean and green” reputation, at least temporarily.  Only time will tell how lasting and adverse the impact is, but the early signs are that the damage has been contained.

It is interesting to consider the Fonterra situation in light of the bad apple proverb.  Initially the saying was that one bad apple spoils the whole barrel or basket, making them all rotten.  Based on this interpretation, Fonterra should have halted all production as soon as it had any concerns.

A more common interpretation of the proverb (following the Osmonds’ 1970s hit “One Bad Apple Don’t Spoil the Whole Bunch”) is that you can have one bad apple (or make one mistake) and the whole group need not be tainted.  Indeed, a newer interpretation is that there will always be one or two bad apples and we should just, well, get over it.

Hopefully the world will get over the Fonterra milk powder contamination, putting it down to a
one-off incident that won’t taint the rest of Fonterra’s or New Zealand’s production.  We can be sure that there will be investigations and recriminations and hopefully, some lessons learned.  

The first lesson to be learned is around public relations.  At the time of writing, questions are being asked of Fonterra executives for not bringing the matter to the attention of the government, customers and the public.  Fonterra argues that they couldn’t warn anyone of anything until tests had been completed.  There is some logic to this argument – no point in scare-mongering if the foreign substances detected are not life-threatening.  

I still can’t fathom though how a business involved in food manufacture, with food safety being one of its most important performance indicators, could have a dirty pipe that contaminates its product.  I wouldn’t prepare food at home with dirty utensils, so how on earth did Fonterra overlook a dirty pipe?  Surely an explanation is in order – if only to confirm that it is was an isolated incident and couldn’t possibly happen again.

The second lesson is in competitiveness.  Within hours of Fonterra’s announcement, the Chinese media were getting the boot in.  This is not surprising given that China’s infant formula sector is desperately trying to regain market share following the 2008 melamine scare that killed six babies and made many more very sick.  The Chinese made the most of Fonterra’s plight by bringing into question the whole of New Zealand’s “100% Pure” marketing campaign.  This competitive response was to be expected, given that we are a big player in China – almost 90% of China’s imported milk comes from New Zealand, mostly supplied by Fonterra.  All credit to Fonterra management for basing themselves in China during the furore so they can show their clients they care, and keep the matter in perspective.       

The final lesson arguably is for New Zealand as a whole.  This could have been a disastrous scenario.  If China imposed a widespread trade ban, we’d be dead in the water.   The sooner we diversify our export base away from the farm gate, the better.