Several countries have banned imports from Fonterra after bacterium that can cause botulism was found in some dairy products produced by the company. This news pushed the NZ dollar lower sharply. According to Reuters, the New Zealand currency fell by 2 cents against the U.S. dollar to a one-year low and now it is trading at 0.77 U.S. dollar. Versus a basket of currencies a decrease was 1.1%.
Diary export is a ¼ part of all sales from New Zealand abroad. That is why, a potential crisis in this area can cause a lack of currency revenue and weakness of the national currency.
Agence France-Presse reported that Fonterra which used to characterize New Zealand as a country providing ecological and healthy food has apologized for the bacterium found in milk. Nevertheless, the company rejected the indictments that it had hidden the problem from consumers and had revealed it too late.
The bacterium in milk powder and other dairy products of Fonterra was announced on August 3. After the report, Primer Minister of New Zealand John Key blamed the company for concealment of its mistake.
Many countries supplied with the company’s products reacted negatively to the Fonterra’s information. In particular, Russian consumer watchdog Rospotrebnadzor halted imports of Fonterra’s products, while Rosselhoznadzor, the Federal Veterinary And Phytosanitary Monitoring Agency, has started an additional test of the New Zealand milk. As it was initially reported, China, the largest market for the company, stopped all imports of milk powder from New Zealand also. However, as it was known later, the ban was related to Fonterra only.
Fonterra is the leading company in New Zealand with the stock capital divided between thousands of local farmers. It produces up to 89% of milk in New Zealand.