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SMALL AND medium-size infant formula makers are each losing up to $2 million a week in China as consumer confidence erodes following the false Fonterra botulism scare.
Infant Formula Exporters Association chairman Michael Barnett says contracts worth up to $30m have also been either stalled or put at risk. He warns damage to the New Zealand brand in China extends beyond infant formula and other milk products.
Barnett, taking a delegation to China next week, says a recovery plan involving government agencies and exporters is needed to rebuild consumer confidence and stem losses.
Barnett told Rural News it is unfortunate that exporters have become “collateral damage in the botulism incident”. “They are suffering through no fault of their own,” he says.
The result for them is their China business has ceased and is being taken over by other foreign suppliers. “I am aware of businesses losing millions of dollars each month, so we urgently need to see a change in trust and confidence in the New Zealand brand.
“Our people on the ground in China report that European [competitors] now see an opportunity to challenge New Zealand’s premium position as suppliers and are incentivising Chinese buyers to change.”
The Government has outlined an initial plan to rebuild consumer confidence in key markets. It includes a $2 million to help small and medium-size exporters travel to key markets.
Barnett says it’s a signal the Government recognises the need for a recovery plan. He points out the fund is an assistance package, not compensation. “The strength of balance sheets of small companies operating in the area is not enough to pick up costs so the travel grants will help.”
He expects many infant formula exporters to dip into the fund but the brand damage “cuts across every bit of food-related export business”. “New Zealand’s brand has suffered and this can’t go on.”
Barnett hopes to take about 10 exporters to China. MPI and NZTE officials will be on hand to help. The purpose is to meet with Chinese officials, distributors and retailers in Shanghai and Beijing to start rebuilding trust.
“To do that we need to front up to our market in China and provide them the confidence and information they need to convince consumers. If we are to be successful this is going to take hard work and that can only happen if our exporters and government agencies can stand side by side,”
Minister for Primary Industries Nathan Guy says a key component of the Government’s recovery plan will be an intense round of targeted visits to key markets by mnisters and senior officials once essential technical issues are resolved.
“Our response needs to be fine-tuned and targeted to the particular needs of each key market. We already enjoy close relationships with overseas regulators at a technical level but where appropriate, ministers themselves are prepared to engage to assist resolutions.
“These visits will be complemented by incoming visits of overseas ministers, regulators and media to demonstrate first-hand the robustness and professionalism of New Zealand’s regulatory framework and production processes.”
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