15 Oct 2008

Farmers seek reassurance over Fonterra investments

4:21 pm on 15 October 2008

Fonterra's farmer shareholders are calling for reassurances from candidates for board elections about overseas investments, especially in China.

The elections, to be held in November, come at a time when the dairy giant is having to deal with the fallout from the contaminated milk scandal in China, involving its joint venture company, Sanlu Group.

Four candidates, three of them already directors, are seeking seats.

Federated Farmers dairy chair and Fonterra shareholder Lachlan McKenzie says farmers are asking serious questions about the decision to invest in the Chinese dairy industry.

Four babies in China have died and more than 63,000 have been made ill with kidney problems after drinking contaminated milk products, including those made by Sanlu, which is 43% owned by Fonterra.

Milk supplies are believed to have been deliberately tainted with the industrial chemical melamine to give the appearance of a higher protein content.

On Wednesday, the Chinese government said it has ordered the withdrawal of all liquid and powdered milk made before 14 September to help restore confidence.

It is the first time the government has issued a blanket recall of products since the contamination scanal erupted in September.

Fonterra says it is donating $8.4 million to help establish an infant healthcare programme in China.