12-10-13 9:55 PM EST | Email Article

WELLINGTON, New Zealand--A global recall of some Fonterra Co-Operative Group Ltd. (FCG.NZ) milk products earlier this year--triggering the biggest food safety scare in New Zealand history--wasn't the result of regulatory failure, a government report has found.

Fonterra, the world's largest dairy exporter, in August said three batches of whey-protein concentrate might contain harmful bacteria. The news led to recalls in China, New Zealand and elsewhere.

Subsequent testing indicated that the organism wasn't harmful. But the fallout from the scare harmed the country's hard-won reputation as a safe supplier of food. Dairy represents around a third of exports from New Zealand, nicknamed the Saudi Arabia of milk.

"New Zealand's food safety regulatory model is consistent with international principles," Food Safety Minister Nikki Kaye said following the release of the first stage of a government report into the incident. Another report will look into how the incident came about and was handled.

The recall was particularly damaging in China, where growing demand for dairy products has seen the country become one of New Zealand's biggest trade partners in recent years. Some restrictions on New Zealand milk imports remain in place in China and Russia, Primary Industries Minister Nathan Guy said.

The New Zealand government said Wednesday it plans to boost the number of staff in emerging markets such as China to offset official concerns. It will also establish a center for food safety science and a food safety and assurance advisory council.

"We have learned critical lessons from what has been a difficult experience, and the findings of this forward-looking review are an important step in our own reputational rebuild," Fonterra Chief Executive Theo Spierings said Wednesday.

Write to Rebecca Howard at rebecca.howard@wsj.com

 

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(END) Dow Jones Newswires

December 10, 2013 21:55 ET (02:55 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.
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