Fonterra products recalled in China and abroad

The warning about tainted products from New Zealand dairy giant Fonterra is just the latest blow to baby formula sellers amid Chinese consumers' ongoing concerns over food safety. But as Rebecca Edwards from New Zealand's One News Channel reports, China isn't the only market where Fonterra's reputation is taking a hit.

A storm of international headlines and causing growing concern for consumers in the key Chinese market. "I now don't know how to choose," a Chinese consumer said.

International companies supplied with the whey product are also doing recalls in china. 80,000 cans of a UK based formula have been removed from Hong Kong and Macau. Coca Cola China has also withdrawn some products.

Now this editorial in China Daily, a state-owned news outlet, is raising serious questions. It criticises the New Zealand government over quality control, and asks whether the crisis is a result of systemic problems.

John Key, New Zealand prime minister, said, "Everything that I saw over the last three days is that the regulator has acted thoroughly professionally, quickly and as soon as information's come to hand. So I don't think that is right that deregulation is causing an issue here, and actually historically you've got to say as a country and as an industry in food production we've met those very high standards."

For now attention is turning to the results of Fonterra's global dairy trade auction overnight, where tens of thousands of tonnes of dairy products change hands. Analysts say it'll provide the first real insight of how buyers are reacting to the contamination crisis, with experts expecting prices to take a hit.

"At this point the NZ product has been achieving quite a high premium over products from other origins globally, that premiums being anywhere from 5 - 15% over other product, so I think we can look to see that premium eroded and potentially even dip below other product origin prices," said Hayley Woynihan, Rabobank Senior Dairy Analyst.

A price dip could have flow on effect for farmers and the wider economy.