August 14, 2013 11:23 am

Head of Fonterra’s milk products division resigns

A woman talks on the phone as she walks past a shelf of baby formula at a supermarket in Beijing on August 7, 2013. China has fined six mostly foreign baby formula companies a total of 108 million USD for price-fixing, the government said on August 7 in reportedly the country's biggest-ever anti-trust penalty. The firms fined were Mead Johnson and Abbott from the US, Dumex, a subsidiary of France's Danone, a China arm of Royal FrieslandCampina of the Netherlands, New Zealand giant Fonterra -- at the centre of a health scare this week -- and China's Biostime, the National Development and Reform Commission (NDRC) said in a statement.©Getty

The executive in charge of Fonterra’s milk processing business has resigned in the wake of a food safety scare that has threatened to damage the reputation of the world’s largest dairy exporter in its most important markets.

Fonterra, New Zealand’s biggest company by turnover, gave no explanation for the sudden departure of Gary Romano, the head of its NZ Milk Products division, in a brief, three-paragraph statement.

“Gary has made a significant contribution during his time at Fonterra and we respect his decision,” said Theo Spierings, chief executive, who will temporarily take charge of the division.

NZ Milk Products is Fonterra’s most profitable business. It processes milk into cheese and a range of other products including infant formula and whey protein concentrate.

It is also at the centre of a contamination scare that resulted in potentially tainted products being pulled from the shelves in several countries including China, Australia, Vietnam and New Zealand.

Earlier this month Fonterra said it had discovered a strain of bacteria that can cause botulism in three batches of whey protein manufactured in May last year. The concentrate was sent to eight customers, including Coca-Cola and Wahaha, China’s biggest beverage producer.

Mr Romano was the first executive to appear publicly and face the media when Fonterra revealed the “quality issue”. He later faced criticism for giving inaccurate information about a recall of infant formula on national television.

Four separate inquiries have been initiated to examine Fonterra’s handling of the contamination scare – two by the company, one by the government and one by New Zealand’s food safety regulation body.

John Key, New Zealand’s prime minister, has questioned why it took so long to raise the alarm about the contaminated product.

Mr Spierings has apologised several times for the contamination scare and the anxiety it has caused “mums and dads around the world”. The Dutch dairy executive has also visited China in attempt to limit fallout from the incident, which has received blanket media coverage.

China gets nearly 90 per cent of its imported milk from New Zealand and Fonterra is the country’s single biggest supplier. While it has not imposed a blanket ban on Fonterra products, other countries have. Russia, Belarus and Kazakhstan have temporarily restricted imports even though they received none of the tainted whey protein.

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