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Fonterra scandal and deregulation

Written By: - Date published: 8:15 am, August 9th, 2013 - 72 comments
Categories: Conservation, farming, john key, national, science, water - Tags: , , ,

Very early on in the Fonterra scandal there was speculation as to whether the cause of the contamination would be shown to be a product of deregulation. Sure enough, Stuff’s Pattrick Smellie makes a good case:

Is this a Pike River moment for food safety?

… Was this week’s botulism scare not only Fonterra’s Pike River moment, but also New Zealand’s, when it comes to the enormous value of food exports to its economy and the possibility the country has lost the capacity to soundly regulate the sector?

That’s a question asked by Simon Terry, of the Sustainability Council, a tireless watcher of what he says is a progressive erosion of the Government’s capacity to directly exercise food safety regulation.

That erosion dates back to the late 1990s when a newly elected Labour government ceded sovereignty to an Australasian food body. Most of the scientific and political clout at Food Standards Australia New Zealand now resides on the other side of the Tasman. …

At the same time, New Zealand began moving from explicit regulation to company-specified risk management programmes. …

Terry says the degree of devolution of food safety standards to individual companies is another facet of a seriously weakened food regulation system.

He has been told that the ministry is “focused on supporting economic growth” and worries that the assurance side of the equation – which includes food safety – is suffering as a result.

When scientists like Dr Mike Joy try to highlight our environmental / contamination problems, and argue for stronger regulatory protections, they are belittled and attacked by Key and the
Nats
. Then along comes an event like the Fonterra scandal, proving just how vulnerable we really are. The damage is not done by scientists. The damage is done by closed minds, slack regulation, contamination and cover-up.

The lesson of the Fonterra Scandal is that Mike Joy and other scientists are right. To protect its environment, its brand, its exports and its economy, NZ needs to strengthen regulatory protections and clean up its act.

72 comments on “Fonterra scandal and deregulation ”

  1. Ant 1

    I don’t see how regulation could have this could have avoided this one to any meaningful degree tbh.

    • RedLogix 1.1

      Given the huge scale and complexity of the plant that Fonterra operate I would argue that the original technical root failure was always going to happen sooner or later. These things happen, engineering lessons will be learnt and hopefully they will avoid a repeat.

      However the most concerning failure seems to have been around the difficulties Fonterra encountered in detecting, qualifying and rectifying the problem. Worse still their attempts to transparently report the problem have been fumbled and backfired on the company. This aspect is of particular concern … other players in the food industry will look at what has happened here and may well be thoroughly dis-incentivised to report safety issues.

      If you want the industry to report and properly handle these kinds of safety issues, you have to make it feasible for them to do so without the market over-reacting.

      • blue leopard 1.1.1

        That doesn’t make sense? The damage to the company is due to their slow response to a possible problem and not from having [eventually] gotten onto the problem and reporting it.

        • weka 1.1.1.1

          Made sense to me.

          There are so many unanswered questions, and so many people jumping to conclusions before we know what happened. I have no idea to what extent Fonterra have been negligent. To assess that we would need to know the risk of the contamination, who assessed and how, what the regulations say and whether these were followed. Do we know that yet?

          Comparing Fonterra/Hautapu to Pike River seems extremely counter productive to me. Not only has no-one become sick, let alone died, but as far as I can tell the risk itself is very, very small that anyone ever would. Comparisons with Fonterra or articles like Trotter over at TDB calling Clostridium ‘deadly’ are hyperbolical, and just create misinformation and misunderstanding about what is going on.

          • marty mars 1.1.1.1.1

            Yes I agree the comparisons are not really valid. Obviously the whole thing is about the ‘health’ issues from a consumers point of view, yet it seems to me that any ‘health’ issues have been drowned out by the ‘marketing/image’ issues relating to the speed and appropriateness of the response. Perhaps this is just the way you spin it in these situations.

          • blue leopard 1.1.1.1.2

            @ Weka,

            I was hoping that Redlogix would have explained; I may have got the wrong end of the stick however:

            “Worse still their attempts to transparently report the problem have been fumbled and backfired on the company. This aspect is of particular concern … other players in the food industry will look at what has happened here and may well be thoroughly dis-incentivised to report safety issues.”

            This to me is fuzzy logic

            The problem is that toxins got into the food supply.
            The second problem is that this wasn’t picked up.

            The problem hasn’t been with the reporting of this, the problem is that toxins got in the food supply and it took so long to pick that up.

            If ‘other players in the food industry’ entertain the view that there is any ‘disincentive’ to report food safety issues coming out of this event, then they need their heads checking and really shouldn’t be in the food industry at all

            • weka 1.1.1.1.2.1

              Another problem is that 98% of commenters are making assumptions.

              Clostridium itself isn’t a toxin. It exists in honey in the US for instance, but doesn’t cause illness (there is a general rule not to feed honey to babies under 1 yr, but even then I think the risk is pretty low). People making hyperbolical statements about the deadliness of Clostridium are confuing the picture, and adding to the general paranoia we have about food and bacteria. It does us a great disservice to conflate the low risk in this situation with actual deaths from negligence at Pike River.

              In fact Fonterra DID pick up the contamination, and when they had the relevant information the DID inform the people that needed to be informed. The question is why did it take them so long. The answer I have heard is that milk is not normally tested for Clostridium. If that is true, then this whole situation is a rare accident. Whether the broken pipe should have been picked up some other way, and whether Trotter is right that Hautapu is an unsafe environment for processing food, I don’t know. It may well be. But at this point in time, the cart is well before the horse. There is due process to follow here, and we’re not following it. I can see how that would make other food producers nervous.

              I also think it’s likely that deregulation has a part to play. Problem is, I’m not seeing the evidence that this is the case with the Fonterra situation. I’m seeing a lot of assumptions and jumping to conclusions. Again, why should food producers trust that?

              • @ Weka,

                You make a point if that is the case and clostridium is not tested for.

                This does not justify the view that reporting the problem has gotten Fonterra into trouble; in this case it was a lack of knowledge or a lack of necessary testing systems, not the reporting of it.

                How do you suggest that Fonterra picked up the problem if it is not tested for?

                I do not see how you can conclude that due process isn’t being followed. The message has been very clear. Containment of the problem is the imperative first step, then investigation will follow

                “Comparing Fonterra/Hautapu to Pike River seems extremely counter productive to me. Not only has no-one become sick, let alone died, but as far as I can tell the risk itself is very, very small that anyone ever would. ~ Weka

                The risk in the Fonterra products is so very very small that it has been recalled world-wide.

                Comparing this issue with Pike River is not counter productive if the two issues have a common problem. If we do not know what the problem is yet, then isn’t it you who are making assumption by stating that such a comparison is counter-productive? You could simply say, it is too early to make the comparison.

            • RedLogix 1.1.1.1.2.2

              Sorry been rather busy.

              All milk production systems are routinely cleaned using Clean In Place (CIP) systems. Most milk processing is done in batches. You start with a clean system and then usually about once per day every pipe and vessel that comes into any contact with milk is re-routed (using automated valves) so that several different cleaning fluids are pumped through them. One is usually alkaline, the next acidic and then it’s all flushed out with hot water. (Or some variation on this.)

              While this sounds simple, in practise it’s a highly complex and demanding business because you have to ensure every step of the process (and there are a thousands of them) is completed accurately and that there is no chance of cleaning fluids cross-contaminating milk. It’s normal for these things to take many months to design, implement and commission.

              The failure to complete this properly at Huatapu is what is being called a ‘dirty pipe’. I don’t know the exact details yet. Alternatively they could have been using plant that was not normally used and this meant that there were some hidden faults or bugs that had not been properly tested before production. A bad mistake on their part, but not an unexpected one. If I can draw a parallel with airlines … despite a massive safety and maintenance regime, every now and then they crash one.

              If Chris Trotter is right and the staff at this plant knew that they had shipped product despite ‘crashing’ their plant … then they really have let the industry down badly. They deserve what is coming to them.

              The end result of this was that three batches of whey were made with some level of a Clostridium bacteria in it. In general this bacteria is indicative of a food spoilage problem and is quite commonplace. It was only after some time had passed that it was identified as a specific type of Clostridium that can produce the botulinium toxin. It may well turn out that there is a perfectly reasonable explanation as to why it took so many months to get to clarifying the problem.

              • Thanks for the explanation RedLogix, it sounds like you know heaps about the process, interesting to know a bit more.

                I still do not see how it can be viewed that reporting the matter was a problem?

                Unless it is as Weka says, that Clostridium bacteria is not tested for? Which doesn’t sound right. The media really have gone even more to the dogs than I thought possible, if they couldn’t have relayed that important element of the issue.

                • weka

                  “Unless it is as Weka says, that Clostridium bacteria is not tested for? Which doesn’t sound right”

                  Why not? They’re not going to test for every known pathogen in NZ. They’re going to test for the ones that are expected to show up in milk.

                  Associate Prof Steve Flint, Associate Professor in Food Microbiology at Massey University, responded to the following questions:

                  Has there been a botulism outbreak in NZ previously?

                  “Two confirmed cases were associated with home preserved watercress and boiled mussels back in 1985. ”

                  How common is food related botulism generally?

                  “It is rare.”

                  Fonterra has stated that the contamination came about due to a “dirty pipe“, could you speculate on how this might lead to the bacteria entering the food supply.

                  “A dirty pipe would not be expected to harbour this organism. This is very unusual.”

                  What safeguards would typically be in place to prevent contamination events like this?

                  This is a very unusual incident and until we know more about how this occurred, it is difficult to offer any advice.

                  (my emphasis)

                  http://www.sciencemediacentre.co.nz/2013/08/05/infant-formula-and-botulism-experts-respond/

                  “I still do not see how it can be viewed that reporting the matter was a problem?”

                  It’s not. It’s the kind of reaction that’s happened since the reporting that is a problem. (how Fonterra handled the reporting is most likely also a problem).

                  • @ Weka

                    I still do not see how it can be viewed that reporting the matter was a problem?

                    “It’s not. It’s the kind of reaction that’s happened since the reporting that is a problem. (how Fonterra handled the reporting is most likely also a problem).” ~Weka

                    It’s not. Exactly – which was my point from the outset.

                    • weka

                      You said The damage to the company is due to their slow response to a possible problem and not from having [eventually] gotten onto the problem and reporting it.

                      I think the damage so far is from the over-reaction before anyone knew what had actually happened. Do we know the details of what was done and why it took the length of time it did?

                      You may be right, Fonterra may have badly dropped the ball. But do we know or are we guessing?

                      I took Red’s point to be that, if Fonterra have done the right thing, and followed correct procedure, then the castigation of them serves as a warning to other food processors.

                      I also thought he said that Fonterra’s PR has been poor, which I agree with.

                    • I have not been pursuing whether Fonterra ‘badly dropped the ball’ or not.

                      The point I have been questioning is Red Logix apparent view that companies may be 'disincentivised' from reporting problems due to what has occurred.

                      I think this is point displays false logic which has potentially devastating consequences. It is not the reporting that has gotten this company into trouble; this is the only way they were able rectify the actual problem, which was that potentially toxic elements (potentially enough to recall all the products world-wide) have gotten into the food supply.

                      If food manufacturers were to proceed with such logic, then at any point, anytime, we could be ingesting something potentially lethal just so as to save food manufacturers the problem of having to deal with a bit of poor publicity and the dip in profits that might lead to. (Basically loss of profits versus following safeguards to ensure food safety).

                      You have made a fair point about not knowing all the details and making assumptions, however you appear to be happy to make some yourself making some yourself, such as the use of the word ‘over-reaction’.

                    • weka

                      AFAIK, no-one has said that the reporting by Fonterra caused the problem. I think that is an issue in your own head there bl.

                      You have made a fair point about not knowing all the details and making assumptions, however you appear to be happy to make some yourself making some yourself, such as the use of the word ‘over-reaction’.

                      I’m not making an assumption based on things I don’t know, I’m describing what I am seeing here and in the MSM.

                      You present me with some credible information that the risk in this situation could ever lead to deaths on scale of Pike River, AND that this IS due to deregulation and Fonterra cutting corners etc (instead of being a rare accident), and I’ll withdraw my opinion that comparing the whey protein contamination with dead miners is over-reaction.

                    • blue leopard

                      Not in my own head Weka

                      “Worse still their attempts to transparently report the problem have been fumbled and backfired on the company. This aspect is of particular concern … other players in the food industry will look at what has happened here and may well be thoroughly dis-incentivised to report safety issues.” – Red Logix

                      No, it is not of particular concern. What is of concern is here is contaminated food getting into the supply chain.

                      “I’m not making an assumption based on things I don’t know, I’m describing what I am seeing here and in the MSM.

                      You present me with some credible information that the risk in this situation could ever lead to deaths on scale of Pike River, AND that this IS due to deregulation and Fonterra cutting corners etc (instead of being a rare accident), and I’ll withdraw my opinion that comparing the whey protein contamination with dead miners is over-reaction.”

                      This is dishonest. You are drawing your conclusions regarding over-reacting based on the assumption that this event was unavoidable. As you, yourself say, the facts haven’t been investigated yet. You put forward the position that people are wrong to have opinions based on assumptions before the facts are known, however, are doing this yourself.

                      I thought you made a fair point around being better to wait until the facts come out before drawing conclusions, however for the above observation, your objections end up sounding that it is because the conclusions being drawn go against your own conclusions.

                      As you say, we don’t know whether this is due to deregulation or Fonterra cutting corners etc or not for sure until an investigation is conducted.

                      However:

                      a) noting it has been evident for a long while that there is a culture of laxity being created and causing problems since this government has been in. It is a fair to assume that this could be part of the problem on this occasion too.

                      b)We already know that a disused pipe was employed, this is clearly a point that extra care would be needed. However, contaminated foodstuff was sent into the supply chain from it. It is fair to suspect that due care may have been missing.

                    • blue leopard

                      For clarities sake: I have not been positing that reporting the issue is the cause of the problem. This is disingenuous.

                      I have been objecting to the view Redlogix put forward that reporting a problem could in anyway be seen as a problem for companies in the future.

                      This is a false and dangerous conclusion for any company to draw out of this event.

                    • weka

                      I don’t think that is what RL said.

                      You are drawing your conclusions regarding over-reacting based on the assumption that this event was unavoidable.

                      No. I’m. Not. I’m saying lets wait until we have some evidence before we draw any conclusions.

                      I thought you made a fair point around being better to wait until the facts come out before drawing conclusions, however for the above observation, your objections end up sounding that it is because the conclusions being drawn go against your own conclusions.

                      Then you really haven’t been reading my comments properly. Go back and read again and you will see that a number of times I have speculated on the possibility that Fonterra dropped the ball here.

                      As you say, we don’t know whether this is due to deregulation or Fonterra cutting corners etc or not for sure until an investigation is conducted.

                      Right. Or maybe it was an accident (or all three, or some other explanation we haven’t thought of yet). So why pillory Fonterra before we know? What does that achieve?

                    • blue leopard

                      @ Weka,

                      I reread comments prior to responding to anyone to ensure I am responding to what it is they are actually saying.

                      I suggest you do the same.

                      It is completely incorrect to say that I am pilloring Fonterra, this is not what I have been asserting or questioning.

                      If you had been reading my comments properly you would see that.

                    • weka

                      This is getting ridiculous.

                      “It is completely incorrect to say that I am pilloring Fonterra, this is not what I have been asserting or questioning.”

                      Fine. My criticism has been of the MSM and ts (authors and commenters) and TDB. I made that clear. If you have included yourself in that, that’s up to you.

    • BLiP 1.2

      Off the top of my head, how about . . .

      Food Safety / Brand Protection Regulations101: If preliminary pre-production tests for botulism indicate there might, possibly be a problem, apply a unique identifying code to that batch for tracing through the supply chain and do not sell and certainly do not export and never, ever release to retailers for sale to end consumers anything which might contain even the traces of the product concerned until such time as those indications have been negated.

      . . . but, hey, I’m not earning $5 million + a year to take the fall if anything goes wrong, so , heck, what would I know? Just as well we have all those corporate Atlas types looking after us, I guess.

    • aerobubble 1.3

      Your ignorance of a subject is most certainly not evidence for or against regulation.

      Just as commonsense teaches human works are fickle, that shit always happens, the purpose of regulation is to minimize errors, create a culture of safety, and introduce costs to companies so that they are aware of punishments for failure to follow regulations.

      Why should firms who are safety conscious, do the extra work, who are nothing dealing with the blowback from Fonterra’s mess.

      Anyway from the way I understand it (could be quite wrong), a batch of milk whey was processed that had increased but acceptable levels of background impurities (you know the kind, the 100% clean green backdrop of natural outdoors, i.e. nothing above what is normally coming out of the teets of a cow). Now what seems to have happen is that wasn’t goo enough for the handling of the whey to foreign markets, coupled with the fact that many many downstream consumers may have taken a cut of the whey, or used the same equipment, etc, etc. Now here’s how deregulation comes in, some manager whose more interested in profit and saving on costs, ignores or does understand the full process (including that out of his control) and cuts corners, and because there are no regulative caps on him, he won’t suffer from a corporate mansluaghter charge, etc, there is no incentive for him and lots of short term gains for him to be ignorant of his jobs requirements.

  2. vto 2

    “When scientists like Dr Mike Joy try to highlight our environmental / contamination problems, and argue for stronger regulatory protections, they are belittled and attacked by Key and the
    Nats. Then along comes an event like the Fonterra scandal, proving just how vulnerable we really are. The damage is not done by scientists. The damage is done by closed minds, slack regulation, contamination and cover-up. ” …. and by an attitude filtering down from the top that anything goes, bend the rules, if you can get away with it then do it, laissez faire, cavalier, relaxed about it……

    Fonterra and food safety
    Pike River and mine safety
    Finance companies and banking regulations
    Leaky housing and building regulations

    Each of these sheet directly to deregulation (though not solely, because the weakness caused by the neoliberal religion of deregulation needs to be triggered by some other event of cours)

    Further, I am disgusted at the way Federated Farmers, John Key and Bill English, and all of their disciples run around like headless chooks abusing (mockery etc) our scientists.

    Fucking Stephen Joyce the other day said he believed David Henry over Peter Dunne “because David Henry has no reason or incentive to fabricate or exaggerate.” Well, you pricks Key and English and Joyce, our scientists have no reason to fabricate or exaggerate, but you lot do and Federated Farmers certainly do. You are a bunch of cheap, shallow wide-boys, nothing more. And you are fucking New Zealand up.

    • SpaceMonkey 2.1

      Deregulation is only one aspect of your four examples. Another is lack of oversight and/or quality control. In the pursuit of profits, or the case of public sector “doing more with less”, all in the name of “efficiencies”, the whole quality assessment step has been removed from most organisational processes. If it still exists anywhere, it tends to be toothless.

      In the Fonterra debacle, I understand pipe-cleanliness was the issue and that in turn was linked to a minimum-wage role. Seriously? Either the task of maintaining pipe cleanliness, based on its value and importance to Fonterra, isn’t a minimum-wage role, or better quality control is required in the production process and someone needs to be checking that the pipes are cleaned properly.

  3. BLiP 3

    Well said. Trouble is, such thoughts as expressed in the OP are an anathema to John Key and National Ltd™. Since 2008, National Ltd™ has set about systematically removing any impediments to a corporatised predation of Aotearoa’s environment. Its actions are driven by an ideology premised on infinite, and, thus, imaginary, resources. Based on this insanity, farming has become industrialised to such an extent that it is destroying our way of life rather than securing it, and a second tsunami, this one made up of oil drillers and mineral miners intent on finishing off what farming has started, is already thundering in.

    But, ask John Key what he’s got to say about it all and he’ll tell you he’s “not bovvered”. In fact, the National Ltd™ answer to all the concerns which have been expressed for decades and are now being howled at the government is to sideline the independent environment watchdog and to lay down the necessary steps to begin concealing the damage it has caused via the creative use of statistics and PR. Same ole, same ole.

  4. The lesson of the Fonterra Scandal is that Mike Joy and other scientists are right. To protect its environment, its brand, its exports and its economy, NZ needs to strengthen regulatory protections and clean up its act.

    100% pure corrupt new zealand.

    • blue leopard 4.1

      Yeah and now that profits are at stake there might actually be something done about it.

      Pity that fatalities (such as in the mines and forests) hasn’t been a motivating force for the creatures in government.

  5. Short Plank 5

    Given the damage such an incident would obviously do to Fonterra’s – and New Zealand’s – bottom-line – and given that such a major disaster from a minor incident would inevitably drag in and embarrass Senior Managers right to the top as well as the Board most of whom have no involvement whatever in the whey-making process at Hautapu I have very little doubt that extensive measures and protocols to prevent contamination were designed and implemented across the Company if for no other reason than to protect profits and asses. I cannot for the life of me see how the “deregulation of food safety standards” or otherwise would have made any difference.

    What MIGHT have made a difference would have been the presence at Hautapu of an independent ‘food-safety’ inspectorate which, not being (directly) beholden to Fonterra, would have blown the whistle at the point Fonterra’s own people might, to protect their own asses from the managers above, have decided to keep quiet about an episode of possible contamination which might possibly have been harmful if it happened but probably wasn’t so let’s not rock the boat unnecessarily.

    IF the investigations currently underway reveal that to be the case there might be an argument for installing such an inspectorate and it’s likely Fonterra will even support the idea, although hopefully sufficient heads would roll internally pour encourager les autres.

    • vto 5.1

      You answer your own point in paragraph 2 there shortie.

      What this exposes, exactly like Pike River, is that incentivising a business to regulate itself (you know, because otherwise profits will suffer etc) simply does not work.

      Roger Douglas believed that this incentive would work. But he has been proved wrong. Human beings are more complex than that. In this instance and in the Pike River instance that incentive has been overridden by other factors competing for attention, namely that short term gain beats long term.

      Roger Douglas was simply wrong and this proves it. Again. Greed doesn’t work. He should have known that.

      • vto 5.1.1

        …adding a little more….. this simplicity that Roger Douglas believed in is reflected right throughout the neoliberal philosophy but most especially in how its disciples such as srylandsgosman treat people.

        Like their safety regulatory incentivising, they simplify matters to a point of air-headed fallacy. They treat people as a tradeable commodity, as if people are a production input unit like nuts and bolts. Then they wonder why the people are fucked off and why the people are getting worse and worse off.

        The underlying premises of their neoliberal religion are simply wrong.

    • tracey 5.2

      If that’s correct, how do you explain Pike River?

      You also assume that those in Management by virtue of being in management are competent and focused on this. From what I have seen, and bank economists have been quick to jump on it, the price (auction) and brand of Fonterra has NOT been affected. Accordingly one could argue that they hoped this might never happen, but the cost of making sure it would never happen outweighed the detriment to the brand and price if it did, so they took the chance. A gamble of sorts, well thought out and considered. It just never occurred to them that NZ babies would be affected 😉

      My argument may seem based on some false premises but so is yours.

      • BLiP 5.2.1

        . . . A gamble of sorts, well thought out and considered. It just never occurred to them that NZ babies would be affected . . .

        QFT

        . . . for, such is nature of corporate management in a business environment fostered by a money trader who learned everything he knows while serving under the tutelage of the world’s master criminals.

    • tracey 5.3

      “What MIGHT have made a difference would have been the presence at Hautapu of an independent ‘food-safety’ inspectorate which, not being (directly) beholden to Fonterra, would have blown the whistle at the point Fonterra’s own people might, to protect their own asses from the managers above, have decided to keep quiet about an episode of possible contamination which might possibly have been harmful if it happened but probably wasn’t so let’s not rock the boat unnecessarily.”

      So regulation might have made a difference?

      Of course we could argue that had their been regulation Fonterra might have just paid off the inspector..

      Most telling, imo, is not that this happened but how long it was kept quiet until the company thought consumers of the product needed to know.

      • ghostwhowalksnz 5.3.1

        Thats what happens at Freezing works. There are on site inspectors from a food safety organisation ( AsureQuality New Zealand.)

        They found out the hard way, the only way to be sure was have a regulated system.

        The biazzare thing is that Fonterra has a very well regarded testing and quality control on the raw milk from the farmers shed.
        They seem to have been smug about there testing once it enters their premises

  6. captain hook 6

    nah. the problem here is manques thinking that they know everything and all they have to do is swan around in their new suits now that they have the job.
    a bit like the rejects from slitherin who have found a home in the national party and now believe that the law is there to serve them and them alone.

  7. tsmithfield 7

    If deregulation is the problem, then how come Westland Milk seems to have it sussed.

    • felix 7.1

      lols.

      If deregulation is the problem, then how come every mine doesn’t have 30 bodies buried in it?

      If deregulation is the problem, then how come there are monoclad houses built in the 90s that didn’t leak?

      etc etc

    • tracey 7.2

      You’re right, probably a combination of taking the eye off the ball and greed to satisfy shareholders is the problem. Phew, nothing to see here then.

      • felix 7.2.1

        But tracey, if taking the eye off the ball combined with greed to satisfy shareholders is the problem, then how come every bank and lending institution hasn’t gone to the wall?

        etc etc

        • tsmithfield 7.2.1.1

          The fact remains that even the best companies have occassional recalls. For instance, Toyota was in the news on several occasions recently. The fault here seems to be more to do with the way it has been handled rather than the problem itself.

          For the volume of dairy derivatives that NZ produces, it is incredible we have so few problems. In this case, no-one actually got sick, and the probabilities of anyone doing so were infitesimely small. Given it is food, and especially that it is fed to babies, it simply wasn’t worth the risk, and a recall was the right thing to do.

          My company is supplies and services equipment to several large dairy manufacturers. They tell us that it is impossible to actually eliminate bacteria totally from the system. So, there is always a risk. The best that can be done is to minimise the risk, and to have a thorough testing regime. For instance, in one company I am aware of, they have three red lines for entering a production facility. At each line workers must change protective clothes and wash their hands etc. Bacteria loads have reduced considerably since.

          • fender 7.2.1.1.1

            Yeah it proved hard to handle a runaway Toyota with a jammed accelerator peddle.

          • felix 7.2.1.1.2

            So what? Your assertion was that one company’s good record proves that regulation is unnecessary.

            Now, having realised what an utterly bullshit logical fallacy that was, you’re changing the subject to “no harm no foul”.

            • tsmithfield 7.2.1.1.2.1

              My original argument is just as valid as pointing to a precautionary recall from one company as evidence that deregulation is causing problems. If deregulation actually were an issue, then there would be a lot more problems that what we are seeing.

              • felix

                Yes you’re right. I haven’t seen or heard of anything to suggest any problems exacerbated by deregulation in any industry, ever.

                So I guess your point does make perfect sense after all.

  8. Red Rosa 8

    It seems curious that the offending pipe at the Hautapu plant was identified almost immediately as the source of the trouble.

    Was it in fact ‘an open secret’ around the Waikato from the start – May 12?

    http://thedailyblog.co.nz/2013/08/08/fonterra-contamination-scandal-an-open-secret-from-the-start/

    And if so, why were these warnings ignored?

    Certainly merging the Food Safety Authority with MPI has reduced any serious Fonterra oversight. Note that the Ministers are Nathan Guy and Nikki Kaye respectively. Both have been conspicuously quiet in the whole affair, brushed aside by the heavyweights.

    Another farmer monopoly which needs a full investigation is Zespri. In this case there are proven criminal trading charges, the China market again, while the trail leads right to the top and the Zespri baord approval. Rumour also has it that dodgy pollination procedures, to which the MPI turned a blind eye, are responsible for the PSA outbreak.

    http://www.scoop.co.nz/stories/PO1307/S00271/minister-cannot-ignore-calls-for-an-inquiry-into-zespri.htm

    Farmers, especially under the Nats, are however simply untouchable. They blame the media for the whole ‘storm in a teacup.’ So there.

    http://www.stuff.co.nz/business/farming/dairy/9013000/Farmers-take-Fonterra-fallout-personally

    • Populuxe1 8.1

      That does appear to be the Daily blog reporting hearsay as fact without any citation of source

  9. tracey 9

    I see the Environment watchdog role is being scaled back now…

    Jan Wright states

    “She questioned whether the reports were now completely independent. “A Government statistician is a different kind of independent. What the statistician will do is say the data you are using is correct and accurate, but there is that issue of what data do you use and what is the purpose you have in doing this report?””

    http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10910158

    Don’t worry though, the free-market will ensure the environment is safe and clean.

  10. Trotter smells dirty work at the plant.
    http://thedailyblog.co.nz/2013/08/08/fonterra-contamination-scandal-an-open-secret-from-the-start/

    James Ritchie puts it down to corporate capitalism without strong unions to pull it into line.
    http://thedailyblog.co.nz/2013/08/09/the-enemy-of-our-enemy-is-not-necessarily-our-friend/

    My comment on Ritchies article is that strong unions are not enough.

    “First contribution on this I have seen to put it in the context of global capitalism, and which points to the need for workers to take control of industry not only to ensure food safety but prevent environmental collapse.
    Rebuilding unions however, will not be enough.
    Capitalism is in free fall and all monopoly capitalist corporations will come crashing down with it.
    We need to socialise production and the dairy industry can be a model for this. The state is the natural partner of the dairy cooperative so that bulk swaps can be done state to state rather than on the international market. We need a state bank like State Advances that provides cheap credit to farmers, and state marketing to guarantee prices. Such a partnership would benefit both farmers and the whole of society. Eliminating the anarchy of the market will allow agriculture to be planned to meet basic social and environmental needs.
    The unions can play an effective role in this by extending activism in the workplace to promoting such a program in its policies and lobbying the parties of the left.”

    • weka 10.1

      “Trotter smells dirty work at the plant.”

      Trotter spreads rumour without bothering to back it up.

      fify.

  11. wyndham 11

    Irrespective of the problem or the crisis that engulfs the reputation of this country, there is an answer !

    Bring on Steven Joyce! By means of cheap abuse, hectoring and obfuscation coupled with a generous dose of sarcastic unpleasantness, this minister ( known as Mr. Fixit) has done more to reduce NZ politics to the gutter than anyone else I know. Admittedly there is a big field but Joyce beats them hands down. Ugrrh!

  12. Plan B 12

    I think many people are either by mistake or on purpose confusing what regulation means. Regulation is not just the rules but also people to infoce the rules, people to help companies undertstand and comply with the rules. etc

    The simple comparison is with the Police.

    We have a great many laws and we have police. The government likes writing laws but hates paying for police/ Social Welfare officers/ Truancy People/ Nurses in Scghools etc etc.

    It is people on the ground that make the real difference.

  13. tracey 13

    Interesting that a regulated and unionised market… lije oz and germany can thrive… yet sonehow it holds back nz.

    • tc 13.1

      It’s a maturity issue tracey.

      Oz/Germany recognise strong unions and regulation make for a better overall result by keeping industry honest, transparent, standards based and competitive while at the SAME TIME workers are fairly remunerated, it’s called win-win.

      The free market wants ‘me win all the time, it’s for your own good’

  14. Ad 14

    The best and far and away most effective regulator New Zealand’s dairy industry has (or indeed needs) is the global media, in this case the Chinese one. The Chinese will use the incident to slap down any dairy exporter to China in order to grow their own dairy businesses at the expense of the multinationals. Other competitors such as those in Brazil will watch this play at our expense.

    So we have no choice but to support Fonterra throughout this event. Hold it to account, sure, but make sure it improves rather than is destroyed. In the foreseeable future we will have no other company or indeed industry to replace it – we can’t afford to lose that amount of tax, employment, global force, or collective strength.

    The only major improvement to our manufactured export earnings in the last decade has been dairy products – led by Fonterra. It sure ain’t any other industry that will enable a transition for Southland’s economy beyond aluminium production.

    Calls for re-regulation is a ridiculous after-it’s-bolted response. Government’s LandCorp should be a member of Fonterra’s Shareholder group, and in fact with over 10% of New Zealand’s exports tied up in one company, there should be a Minister permanently sitting as a Director of Fonterra. The state’s interest on behalf of the nation should be there from the beginning.

    In comparison the rest of our manufacturing companies are either tiddlers or sellout if-only stories like Navman or Constellation. Fonterra is our Nokia – with a chance it could follow the same path. Or continue to take on the world.

    • ghostwhowalksnz 14.1

      No no . Having more suits on the board wont help.

      Have independent quality inspectors in Fonterra factories- just the meat works do.

      Watch them fight that suggestion

      . But the meat farmers are happy with the current inspection system and the dairy farmers will want something similar. Or we could leave it all to chance like the current system

      • Ad 14.1.1

        “The Suits” are the only people who connect corporate reputation, responsiveness to suppliers, those who audit and control processes, and those who carry them out. No regulator can do that. I’m tired of a regulator-based economy. I wand a shareholder economy in which workers, suppliers, investors etc are all around the table taking benefits and feeling the risks.

    • tc 14.2

      ‘Fonterra is our Nokia…. Or continue to take on the world.’

      Fonterra is effectively a logistics company and a poor one at that. The noose on all this milk being produced will tighten once China/Sth America catch up in powder production.

      It’ll never be a Nokia, it’s a co-op that farmers can move from to a better deal, that’s why Fonterra are so keen to tie them up and de-power those pesky stakeholders.

      • Ad 14.2.1

        Nokia were a logging comnpany before they got going into electronics. You don’t get more logistics than that.

        Fonterra is already a long way from the Andrew Ferrier culture of domination through bulk commodity trades. It’s on the right path. Check out your supermarket chiller section and you’d be surprised not only at the brands they own themselves, but also the brands that carry a majority Fonterra-sourced ingretients.

        • tc 14.2.1.1

          I just don’t think they’re nimble enough and are too top heavy/wasteful as such risk farmers moving to better returns.

          As for having lots of brands IMO that not diversification when it’s the similar product just with different labels in a NZ supermarket.

          • Ad 14.2.1.1.1

            That was half the point of the recapitalisation and the floating of the units on the stock exchange this year: to decrease their reliance on the natural financial conservatism of farmers. Yes they are a monolithic company, but they are changing for the better.

            As for the diversity of their product range, if you haven’t got the time to look on the underneath of the products in the supermarket chiller (personally I loathe supermarkets), just have a good interrogation of the Fonterra site under their product range.

            • BLiP 14.2.1.1.1.1

              In what way does exposing future profits to contrived speculation, diminishment by ticket-clipping, and transfer in part out of New Zealand, make Fonterra “better”? I’m genuinely interested in learning more about how this is a positive thing for the owners and those with a stakehold in securing a long term future for Fonterra.

  15. tracey 15

    and more forestry inspectors.times without inspectators little has improved. bring them back and it cant get worse.

  16. Rosetinted 16

    A different sort of scandal involving Fonterra and dairy farmers breaking with the traditional standard green outside feed we built our business respect with. Tonight on Checkpoint about 6.30 p.m. there was a report about an investigation into the palm kernel industry in Indonesia originally on Bloomberg News.

    Some group called KLK is implicated. Youngsters are being shanghaied, promised good jobs and taken hundreds or thousands of kilometres from their homes and have to live in slave camps for no or little pay. The one who managed to escape was to be a driver, but actually had to spray dangerous chemicals that are forbidden in many countries. They are guarded and might have to sleep in windowless rooms and if they run away are likely to be caught and beaten in front of the others, who might be as young as 14.

    https://www.rainforest-rescue.org/mailalert/921/cargill-forced-labor-is-intolerable

  17. BrucetheMoose 17

    After the debacle of deregulating the building industry, which included relaxing the independent inspection/auditing process to keep it in check, you would think National would have learnt that leaving respective industries, especially large core industries, to self regulate is not an intelligent management strategy. Looks like being smart is not a top priority where National’s policy making is concerned. Still sticking to that fruitcake free market ideology in the hope it will come good one day. In the meantime, Stachybotrys or a helping of Salmonella anybody?

    • Paul 17.1

      “ONe could argue the country is hostage to a blinkered devotion to laissez-faire market ideology.”
      China Daily
      As Chris Trotter says “Sometimes it takes an outsider to correctly diagnose an affliction to which its sufferers – that’s us! – have become inured”

  18. Lorraine 18

    The professor of agricultural business studies from Waikato University on the nation this morning should be put at the top of the board for Fonterra. This has been so badly handled and as she said if it had of been made clear it was spoors not the toxin there may have not been such a ridiculous backlash from the chinese who are cancelling holidays here because it isn’t 100% pure.
    The other thing is Fonterra is putting all it’s eggs in one basket re China. That isn’t wise business practice.
    Maybe it is time to have a new tourist marketing slogan and ditch 100% pure because the way the government are destroying the environment, changing environmental protection laws and taking away the rights of people so they can’t protest the destructive intensions of this government for profit by a few at the top of the heap.

    • blue leopard 18.1

      The 100% pure marketing has been some sort of protection for us from unfettered violation of our environment from money-interests such as the oil industry.
      This government would very much like to ditch the 100% Pure angle for that reason.

      Better to ensure that we are doing what we can to ensure our environment isn’t abused and keep the slogan. Better for all Nzers, visitors, buyers of NZ products and the environment that way.

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