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Fonterra managers failed to immediately escalate WPC80 concerns to CEO, review finds

Wednesday 4th September 2013

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Managers at Fonterra Cooperative Group waited days before escalating a clostridium bacteria contamination that led to a global recall up to chief executive level, according to the dairy giant's own operational review.

As a result of the review, Fonterra is to create a new role of group director of food safety and quality, answering direct to the CEO. It will also overhaul its communications protocols for handling a crisis, as well as its systems for product tracing.

The Auckland-based company told reporters today that the contamination had originally been precipitated by concern a piece of plastic falling into a drier at the Hautapu plant in the Waikato back in May 2012.

Rather than downgrade the product it was decided to reprocess the powder, which is how a non-standard transfer pipe - thought to be the source of the contamination - came to be used.

The review found that the problems were compounded by "a number of un-related events in an unforeseen sequence," CEO Theo Spierings said.

They included a one-off lapse in information sharing between two parts of the company that resulted in delays in testing and a major upgrade of computer systems at some sites just prior to the recall, which meant it took longer to trace all the whey protein concentrate (WPC80). The recall was big and complex, especially as some of the WPC80 had become an ingredient in the products of multiple customers, it said.

Spierings himself wasn't immediately advised when the risk of clostridium botulinum was first identified by Fonterra's own research centre or when it was tested again by AgResearch.

The Crown Research Institute's results, which did show the botulinum strain, were first reported back to the company on July 29 and again on July 31 though Spierings wasn't informed until Aug. 1, he said today.

AgResearch's findings have since been disproven by further tests, which showed the contamination was by the relatively harmless clostridium sporogenes.

Spierings said the issue should have been escalated when AgResearch was first engaged. "The red flag should have gone up faster." In a case of contamination, the product would normally be sidelined and in the case of AgResearch's results, a second opinion could have been sought immediately, he said.

Fonterra has received no compensation claims from customers as yet and is currently in talks around contracts and claims, he said.

The dairy company didn't immediately release the review itself, but made available six powerpoint slides.

BusinessDesk.co.nz

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