Fonterra says China-bound milk powder halted in May for high nitrite

New Zealand's Fonterra, the world's biggest dairy exporter caught up in a contamination scandal earlier this month, said on Thursday it was also forced to withdraw 42 tons of milk powder bound for China because of high nitrite levels.

The high nitrite was first brought up by the official China Daily in late July and has dealt another blow to the company after it announced earlier this month that it had found bacteria that could cause food poisoning in some products

Fonterra had to apologize for a milk powder contamination scare in China after contaminated whey protein concentrate had been sold to China, Malaysia, Vietnam, Thailand and Saudi Arabia and used in products including infant milk powder and sports drinks.

The company said on Thursday a shipment of powder had also been halted at the Chinese border in May after tests showed nitrite levels higher than allowed in China, although it had been approved for export after testing in New Zealand.

Nitrites occur naturally in water, soil and food and can be used as fertilizers and preservatives. Excessively high levels can be toxic.

Fonterra's group director of food safety and quality, Ian Palliser, said that the milk powder showed nitrite levels of between 1.4 parts per million and 1.8 ppm when it was shipped from New Zealand, but showed higher levels in Chinese tests.

"The limit is 2 parts per million in China and the product tested at somewhere between 2.4 ppm and 2.8 ppm," Palliser told Radio New Zealand.

He added that China had a much lower threshold for nitrite levels than New Zealand, where levels of up to 5 ppm are considered safe for domestic consumption. Palliser said that the levels were "not a food safety issue whatsoever".

"The levels were below the New Zealand standards. This product could have been sold safely in New Zealand."

Fonterra said that it had been in full control of the affected product and that none of it had reached the retail supply chain.

Wellington has voiced frustrations over Fonterra's foot dragging in disclosing the contamination issue, and during a visit to China on Thursday, Foreign Minister Murray McCully sought to distance the country from Fonterra's woes.

"Fonterra has some work ahead of it in rebuilding Chinese consumer confidence," he told reporters in Beijing following meetings with State Councillor Yang Jiechi and Foreign Minister Wang Yi.

"We expect from our exporters that there should not be any mistakes ... When Fonterra disappoints customers, they also disappoint New Zealand."

Dairy products account for about a quarter of New Zealand's export earnings, and China is its biggest buyer of milk powder.

Earlier this week, Fonterra's much smaller competitor, Westland Milk Products, had export certificates revoked for a small quantity of the protein lactoferrin because of unacceptable levels of nitrates were discovered in four consignments.

(Reporting by Naomi Tajitsu in Wellington and Megha Rajagopalan in Beijing; Editing by Nick Macfie)