New Zealand

China has stopped imports of all New Zealand milk products after bacteria that can cause botulism was found in some dairy products.

Dairy giant Fonterra says it had sold contaminated New Zealand made whey protein-concentrate, used in infant formula, to importers in Australia, China, Malaysia, Vietnam, Thailand and Saudi Arabia.

And China is Fonterra’s largest market.

Chinese parents have put their faith in imported milk formula because they don't trust local products.

In a 2008 milk scandal, six infants died and hundreds of thousands were ill from baby milk formula tainted by melamine.

Fonterra was indirectly implicated then because it held a stake in Chinese company Sanlu which added melamine to bulk up its formulas.

The New Zealand company was criticised then for not blowing the whistle sooner, and now by no less than Prime Minister John Key.

The problem product was made in March last year.

“You'd think they'd take such a precautionary view to these things and say, if it's testing for some reason in an odd way, that it would just be discarded until they were absolutely sure it's right. Now, that's something the chief executive will have to answer one day.”

Chief Executive Theo Spierings flew from Europe to Beijing to hold a press conference where he said it was very important for him to personally offer reassurances.

“We deeply apologise to the people who have been affected by the issue to guarantee to you that food safety and safety of the people of China and also around the world will be our first and foremost interest.We really regret the distress and anxiety which this issue could have caused.”

Its the first appearance by a representative of the company which has been communicating via statements posted on its website.

It says there have been no reports of any illness linked to affected products which include sports drinks and animal feed.

Although the contamination is limited to particular batches of milk protein some countries aren't taking any chances. Botulism is rare but very serious and can be fatal.

Scott Gallacher is the Acting Director-General of New Zealand's Ministry for Primary Industries.

“We do face some market closures. Russia, for example, appears to have put a temporary ban on all New Zealand dairy products.”

The suspect protein was also sold to Malaysia, Vietnam, Thailand, Saudi Arabia and sent to Fonterra's factory in Australia.

Fonterra is New Zealand's biggest company, its biggest exporter and the world's biggest dairy exporter.

Nathan Penny, an economist with Westpac New Zealand says the share price was punished when the market first heard the news.

“It started the day at $NZ7.12 and went all the way down to $6.50. And then after that it did come back up to $6.80, so a fairly big decent hit.”

Fonterrra's troubles might not be as easily contained as it hopes.

According to Xinhua in China the quarantine and inspection service also issued a consumer warning for three batches of Karicare-brand dairy products produced by another New Zealand company Nutricia which has initiated a recall in New Zealand.

The affected products are not officially imported to China, but may have entered the country according to the quarantine service through undocumented channels.