New Zealand takes control of Fonterra milk scare response

New Zealand moved to seize control of Fonterra's response to a contaminated milk scare Tuesday, after criticising the dairy giant's handling of a crisis which has tainted the country's "clean, green" image.

Economic Development Minister Stephen Joyce said officials had been sent to Fonterra premises in New Zealand and Australia to ensure the information the company supplied about a potentially fatal bug in some products used to make baby formula was accurate.

Joyce acknowledged it was unusual for the government to take such a hands-on approach with a private company but said global consumers needed to regain confidence in New Zealand's dairy industry, which accounts for a quarter of the country's exports.

He said data Fonterra initially provided about the presence of a bacteria that can cause botulism had proved incorrect, leading to contradictory advice and confusion amid product recalls from China to Saudi Arabia.

"It's certainly pretty frustrating, that's probably the most generous term I could use," Joyce told Radio New Zealand. "I'd have expected this information to have been available fairly quickly."

He said about 90 percent of the contaminated product had been found and Ministry of Primary Industry (MPI) officials hoped to use Fonterra's product tracking records to locate the rest by Wednesday afternoon.

He said Fonterra had not raised any objection to government officials effectively sidelining the company from the crisis management response.

"Frankly, Fonterra has welcomed it because it will speed up the MPI checking," he said.

"It's important that MPI, as the regulator, has to have the confidence, because the rest of the world's regulators are relying on MPI."

Fonterra is the world's largest dairy cooperative and New Zealand's biggest company, accounting for 89 percent of the country's milk production -- 15.4 billion litres -- in 2011 and recording turnover of US$15.7 billion last year.

Prime Minister John Key, who has been one of the company's strongest critics since the scare erupted on Saturday, said he could not understand why Fonterra did not act as soon as it knew there was a problem with some of its whey products.

"If in doubt, be immensely careful -- park it up somewhere and work out what's gone wrong and if there's a real issue here," he told TV3. "I can't tell you why that didn't happen."

Key has promised a "forensic" investigation onto Fonterra's handling of the crisis but said the immediate priority was finding the contaminated product to ensure there was no risk to any infants.

The scare has seen restrictions put on Fonterra products imported into China while Dumex and Karicare, both subsidiaries of French food giant Danone, issued recalls in China, Hong Kong, Malaysia, Singapore, Thailand and New Zealand.

Authorities in Russia also ordered a recall of Fonterra's products and advised consumers against using them, domestic reports said, while New Zealand and Vietnam both warned parents to avoid some types of Karicare formula.