Fonterra fallout questions yet to be answered
Numerous questions and the extent of market fallout remain after New Zealand-based Fonterra gave notification of potential quality and safety issue involving three batches of whey protein concentrate-80. The product was produced at a single New Zealand manufacturing plant last May, and recently tested positive for the bacterium Clostridium Botulinum which can cause botulism.
In reaction, Russia temporarily suspended purchases of all New Zealand dairy products, while China stopped imports of whey protein and a dairy base powder from Fonterra used in infant formula.
While there have been no reports of any illness linked to consumption of the affected whey protein and remains a developing story, High Ground Dairy’s Eric Meyer said it “seems like a pretty big deal,” because New Zealand supplies China with over 90% of its whole milk powder and a lot more of its skim milk and whey milk protein.
U.S. stocks are “pretty decent,” Meyer said, “and our competitiveness in the global market seems to be giving us somewhat of an advantage,” although he added that China and other countries that want to get ahead of this, “the phones have already started to ring.”
He cautioned that “We only have a handful of sources telling us what’s happening on the ground in New Zealand and China so until there’s more information, it’s still a developing story.”
Eyes will be on the powder markets this week, especially Tuesday’s Global Dairy Trade auction, where the vast majority of product sold is from New Zealand. New Zealand prices could fall as a result of this development, Meyer concluded, and other’s prices could rise.
To hear Meyer’s comments, visit http://dairyline.com/tuesday.mp3.