Infant formula poison threat against New Zealand dairy industry

LATEST: Anti-1080 protestor fears backlash from 'lunatic' threat

To hear more from Duncan Bridgeman and Jacqueline Rowarth on this story, tune into Heads Up today from 10am on NBR Radio

A major security operation is under way following threats to contaminate infant milk formula with 1080 pest control poison.

Listed securities in Fonterra, Synlait and the A2 Milk Company were placed in a trading halt on the NZX shortly ahead of a short-notice Police press conference at 3.15pm  [UPDATE: the trading halt was lifted at 4.18pm, just before market close].

Blackmail threats were made by anonymous anti-1080 campaigners late last year and small packets of milk powder, contaminated with 1080, were sent to both Federated Farmers and Fonterra in November last year.

The letters threatened to poison infant and other formula by the end of March if 1080 was still in use for pest control. 

There is a possibility the threat is a hoax, says deputy police commissioner Mike Clement, but it may not be.

In the meantime, people are being warned to check milk powder packets for any signs of tampering when they buy.

Up to 36 police officers have been engaged in Operation Concord. Some 40,000 raw milk products were tested before the threat was made public. None were contaminated.

The case is being treated as criminal blackmail rather than terrorism.

There has been stepped-up security by Ministry of Primary Industry officials, milk company operations and other agencies, MPI deputy director general Scott Gallacher says.

"The ability for anybody to deliberately contaminate infant and other formula during manufacturing is extremely low.  Regardless, we encourage people to be vigilant when buying infant and other formula."

Since the threat, the ministry and other government agencies have taken additional measures to protect against any threat, including "strengthened security measures in retail stores," enhanced testing and increased vigilance in the supply chain.

At a press conference, Fonterra chief executive Theo Spierings said no new threats had been received since November. He called the letters a "criminal threat to New Zealand" and "an attempt to blackmail New Zealand."

In mid-January, Fonterra began its own testing regime to provide its customers with further assurances as to the safety of its products, Mr Spierings said. Fonterra is testing all raw milk that it processes – testing every tanker.

'Despicable crime'

Mr Spierings described the threat as a "despicable crime, an act to blackmail against New Zealand."

“Our priority here with the government and the dairy industry has been to protect the health and wellbeing of consumers.

"Although we understand that the threat is very unlikely to be carried out, we have done everything in our power to ensure the security of our already world-class supply chains going into markets.”

“Our products are safe”

Tatua chief executive Paul McGilvary says since the letters were received the industry has ramped up testing for 1080. There have been 35,000 tests and no 1080 found, he says.

Mr Spierings says the dairy industry has worked closely with retailers with extra efforts made to control the sale of products.

Asked why the public was not informed of the threat earlier, he said it was a case of working with the police and their investigation and ensuring the security of the supply chain.

Asked about potential financial fallout, Mr Speirings says it is too early to say:. "We are quite angry about it but we are focusing on the criminal case."

‘White Noise'

Units in the Fonterra Shareholders Fund came off a trading halt following the news release having closed the day down 5c at $5.80.

Forsyth Barr analysts released a research note saying they view the criminal threat of milk powder contamination as largely 'white noise.'

"With 40,000 raw milk and finished product samples having been tested for 1080 since the threat was received, as well as already secure processing site and testing regulations being further strengthened, we don’t expect any significant value affect for the co-operative or dairy industry in the long term."

The key risk is the potential for a short-term temporary ban on dairy imports from trading partners, Forsyth Barr said.  

"We understand that key trading partners have already been informed, and thus this seems unlikely."

Trading partners told in February

Prime Minister John Key said initial advice was to establish a testing regime before the threats were made public. Trading partners were told in February.

Minister for Primary Industries Nathan Guy calls the threat "eco-terrorism."

He said the government had worked on testing with 20 suppliers. Retailers had made extra security measures and were monitoring anti-tampering measures with packaging.

Countdown says infant formula will be moved from the main shelf to behind service counters or Lotto desks, so product is monitored.

Low probability

“The probability of the threat being carried out is extremely low,” Mr Key says.

The reason for making the matter public now is because a news outlet was making inquiries about the issue, Mr Key says.

There is no chance of the government stopping the use of 1080, he says.

Deputy General of Primary Industry Scott Gallacher (left) & Deputy Police Commissioner Mike Clement (Rob Hosking)

Deputy General of Primary Industry Scott Gallacher (Rob Hosking)

Primary industry minister Nathan Guy (left) , Associate Health Minister Jo Goodhew (middle), Prime Minister John Key (Rob Hosking)

To hear more from Duncan Bridgeman and Jacqueline Rowarth on this story, tune into Heads Up today from 10am on NBR Radio