Fonterra crisis could worsen before it improves


Kia Ora

There is a distinct possibility that the Fonterra crisis caused by botulism could worsen in terms of its potential impact on New Zealand’s economy and in particular our export sector. Today was about recording the reaction to the news that bacteria linked to botulism may be in some of the products. It was about watching the New Zealand dollar drop steeply by more than 1.5 cents and the share price for Fonterra shedding $0.62c per share. By all accounts it was not a good day for the dairy company that makes up 30% of global dairy product supply. But can things get worse?

Yes.

It is a grim admission to make, but other parts of the export sector are concerned about the flow on effects from this debacle. Although it is not clear which sectors are potentially at risk, I would assume that the real victim would be our “100% Pure” branding, which is actually somewhat misleading advertising that is being used to promote New Zealand to the world. The Minister of Trade is already on the record as being prepared to go to China to assist the Chinese Government. Minister of Food Safety, Nikki Kaye now finds herself dealing with a major crisis that was entirely avoidable.

Whilst it is beyond the scope of this article to comment on the 100% Pure branding, it is worth noting that the source of the botulism scare was traced to a pipe at a processing plant, using whey to create product. That would imply management procedures for the operation of the machinery and the monitoring is not adequate. The fact that the first signs of a problem emerged in March, but that it took until the end of July for Fonterra to say that there is a problem raises questions about how long they knew that something was wrong. The company says that we should have confidence in it and that it’s testing regime is very strict.

It is obvious that this is not entirely the case. Yes one might argue for there being a lapse of judgement on the part of someone operating a piece of equipment or misreading data, which could be attributed to being human – we all make mistakes – but there is more to the problem than is being admitted when it was known back in March 2013 that something was wrong. Are we New Zealanders really as good as we say we are about occupational safety and health when one of our biggest companies employing thousands manages to have two international crises in five years; a mine on the West Coast goes bang killing 29 people; the foreign chartered vessels fishing off the coast of New Zealand get designated the “Wild West” of fisheries?

Ermm… no. We might expect our trading partners to forgive us once and hope that we learn from our mistakes, but twice? If you, the reader were a manager, would you tolerate this twice?

Maybe you might. Maybe you put them on a written notice that if there is a third incident the employee/s in question will lose their job/s and bypass them for certain projects. But when the problem is on the international stage and the reputation of a country that prides itself as clean and green ? No. Non. Nein.

And so we should not be surprised if further revelations of a troubling nature come out about this. New Zealand is better than that. We have let ourselves down badly.

Take Care,

Rob

 

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