The country's two biggest fertilizer companies, Ravensdown Ltd. and Ballance Agri-Nutrients Ltd., have suspended sales of dicyandiamide, or DCD, after low levels were found in dairy products. Farmers apply DCD to pastures to prevent nitrate, a fertilizer byproduct that can also cause health problems, from getting into rivers and lakes.
Government officials Thursday expressed concern about the potential damage to the image of an industry that accounts for nearly a third of the nation's exports.
"New Zealand's reputation is based on the high quality of food we produce," said Carol Barnao, deputy director of general standards at New Zealand's primary industries ministry, which is responsible for exports and protecting the nation from biological risks. A government study of DCD use is now under way.
The New Zealand Grocery Retailer Association and Progressive Enterprises Ltd., which operates the Countdown supermarket chain, didn't return requests for comment. Grocery distributor Foodstuffs Auckland Ltd. couldn't be reached for comment.
In 2008, Fonterra Cooperative Group Ltd., FCG.NZ -0.14% one of New Zealand's largest companies, was ensnared in a scandal involving a milk supplier in China. At least six children died and 300,000 became sick from milk containing dangerous levels of melamine, an industrial chemical that mimics the properties of protein, allowing producers to water down milk without apparently diluting its nutritional value.
Fonterra owned a large stake in one of the companies at the center of the scandal, the now-defunct Sanlu Group, but has flourished in China since Sanlu's closing.
Fonterra is the world's biggest exporter of dairy products, and the latest discovery of a chemical in milk products risked becoming a trade issue, the company's managing director of public affairs, Todd Muller, said Thursday. He called suspending the use of DCD the "responsible approach."
Spoiled Milk
June 2005: Nestlé apologizes for exceeding government iodine limits in infant formula sold in China, though it says there was no health risk.November 2005: Italian inspectors find a chemical from the label in baby milk from Nestlé and Dutch maker Numico, sparking recalls.
2008: Melamine-tainted baby formula from 22 producers—including Sanlu, 43%-owned by New Zealand's Fonterra—kills six children and makes 300,000 more sick in China.
December 2011: Government inspectors find the carcinogen aflatoxin in milk at China's Mengniu; the company destroys the milk and blames moldy cattle feed.
June 2012: Inspectors find detergent in milk from China's Bright Dairy & Food, sparking a recall.
June 2012: Inspectors find "unusual" levels of mercury in milk powder from China's Inner Mongolia Yili Industrial Group, sparking a recall.
July 2012: Inspectors find aflatoxin in baby formula from China's Hunan Ava Dairy, sparking a recall.
Corrections & Amplifications
New Zealand's export dairy industry is valued at NZ$11.5 billion (US$9.7 billion) annually. An earlier version of this article incorrectly gave the figure as NZ$1.1 billion.
