New Zealand’s Foreign Minister Murray McCully will visit China in about a week as the country deals with the fallout from a contamination scare at the world’s largest dairy exporter, Fonterra Cooperative Group Ltd.

McCully will be followed in a “few weeks or months” by trade minister Tim Groser and Prime Minister John Key will visit the country once a report into the incident is completed, Key’s spokeswoman Kelly Boxall said by telephone Sunday.

New Zealand’s dollar fell to a one-month low after Fonterra said Aug. 3 that a dirty pipe at a processing plant may have tainted whey protein used in dairy formula with botulism-causing bacteria. China halted imports of some Fonterra products and the official news agency Xinhua wrote that buyers were losing faith in New Zealand’s clean image.

“It’s really about what is the damage to New Zealand’s reputation, both for Fonterra and for dairy products, but also for the wider products we sell into the Chinese market,” Key said, according to the transcript of an interview with Television New Zealand Sunday. “Fonterra is the poster child for New Zealand’s exporting, whether we like that or not.”

Key will wait to visit Beijing until an inquiry into the incident is complete because “he wants to be able to look them in the eye and give them answers,” Boxall said. Groser was also planning to be in touch with his Sri Lankan counterpart after media reports that Fonterra had recalled milk powder in that country after the government claimed it contained traces of an agricultural chemical, she said.

Dairy products are New Zealand’s biggest foreign exchange earner, accounting for 28 percent of overseas sales in an economy where exports make up about a third of output. Fonterra, New Zealand’s biggest company, accounts for about a third of the world’s trade in dairy products and posted revenue of NZ$19.8 billion ($15.9 billion) in the year through July 2012.

The country’s dollar dipped to 76.93 U.S. cents Aug. 5, its lowest level since July 8, while Fonterra Shareholders Fund, the listed entity affiliated with the farmer-owned cooperative, fell the most on record to NZ$6.86 the same day. Shares have since recovered 4.8 percent to close at NZ$7.19 Aug. 9 while the currency rose 2.7 percent to 80.38 U.S. cents.

In 2008, Fonterra’s Chinese partner Sanlu Group collapsed after locally made melamine-contaminated milk powder killed and hospitalized babies, causing an industry-wide scandal. In January this year, Fonterra had to assure China that traces found in some milk of dicyandiamide, the agricultural chemical at the heart of the Sri Lankan recall, posed no health risks.

New Zealand’s dairy industry employs about 45,000 people tending about 6.4 million cows. Exports began in 1846, just six years after the Treaty of Waitangi between indigenous Maori and the British Crown was signed. Refrigerated shipments in 1882 opened new markets and laid the foundations for New Zealand’s dominance as a dairy exporter. 

(Bloomberg)