Of mice and menby Pattrick Smellie
The humble mouse also played a part in Fonterra’s multimillion-dollar botulism botch-up.
Among the many missteps in last year’s whey protein contamination scare was one that’s easily overlooked: the shortage of mice. When Fonterra hired AgResearch to test a suspect batch of the infant formula ingredient for toxins in July last year, it was initially told the mouse bioassay – a series of tests on sets of mice – would have to wait on its breeding programme. AgResearch’s mouse supply was depleted. Its current crop had just been weaned and needed 10 days to grow.
The Government’s newly published second report on the incident recounts a conversation in a corridor of AgResearch’s Ruakura laboratories, where a Fonterra microbiologist had turned up to deliver samples to the research body’s leading toxicologist.
The two men agreed they had a chat but gave the inquiry conflicting accounts. The toxicologist remembers telling Fonterra’s scientist that he was “short on mice” due to a breeding failure. It would take four to six weeks to breed more but the AgResearch boffin “would do what he could with the mice he had available”. Fonterra’s microbiologist claims there was no talk of a rodent shortage.
AgResearch carried out its first mouse bioassay on July 29. Eight mice were tested, of which one showed “symptoms characteristic of botulinum toxin”. It was euthanised. The second bioassay involved six mice, of which three showed positive results for the toxin and one later died.
The total of 14 mice with two deaths, one by human hand, was a tiny sample. Using US Food and Drug Administration benchmarks would have required 18 mice per sample – a total of 54 mice for the three samples AgResearch got from Fonterra.
The results were crucial because they prompted Fonterra to go public on the possibility that whey protein contaminated with Clostridium botulinum had got into the food chain.
That triggered a complex global product recall, lost sales, damage to New Zealand’s reputation, the resignation of one of Fonterra’s most senior executives and a multimillion-dollar lawsuit from French dairy giant Danone.
Worse, the test results had been lost in translation. AgResearch wasn’t actually accredited to carry out testing for C botulinum, except in a research capacity, and gave only a tentative conclusion that the Fonterra isolates “are likely to be C botulinum”. It couldn’t rule out “other close relatives” and could not “at this stage” determine the toxin type.
AgResearch was “astonished to learn through the media that Fonterra had advised MPI [the Ministry for Primary Industries] of confirmed C botulinum in products on sale in New Zealand”.
The misunderstanding may have been at the Fonterra end. The report says that “by some twist of communication”, NZ Milk Products executives were told that “three out of three” mice had died in the test, which triggered formation of a crisis-management team.
It asks: would they have acted differently if they had the correct information? It answers: probably not, but they might have sought a second opinion, which might have said two deaths weren’t necessarily significant. That was the immediate view of an American bacteriology professor whom Fonterra later brought to New Zealand.
“The manifestly incorrect advice that every mouse injected in the second mouse bioassay had died left no possible room for doubt,” the report says, “closing the door on further discussion.”
– Jonathan Underhill
Riding the roller coaster
New Zealand’s export commodities have had a wild ride in the past year as demand waxed and waned, largely driven by China.
Asia’s biggest economy became New Zealand’s largest partner for traded goods in September 2013, thanks to a rising Chinese middle class and the two countries’ six-year-old free trade agreement.
This year, demand for meat to embellish China’s hotpot style of cooking, in which meat and vegetables are cooked in a broth at the dining table, has pushed up lamb flap prices to record levels and elevated the offcut to premium status.
The gristly ends of the ribs trimmed away when the butcher cuts racks and rib chops were once a cheap cut and were controversial as an export to the Pacific Islands where they were seen as a contributor to obesity.
Back then, they retailed for about US$1.35 a kilogram. This year, flaps soared to US$6 a kilogram, on a par with traditional premium cuts.
Dairy prices have had a boom and bust year, resulting in Fonterra slashing its forecast payout to farmers for the upcoming season to $4.70 a kilogram of milk solids from its record $8.40 last year. Economists say that’s going to reduce industry incomes by about $6 billion.
New Zealand’s largest commodity export has been hit by subdued demand from China, which is working through an oversupply, while European bans on dairy exports to Russia have flooded other parts of the world market. The big question is whether prices will rebound in the year ahead or a second season of low prices looms. The answer to that question will be important to the economic outlook in 2016 and beyond.
The log market has gone through similar volatility, with record prices prompting forestry owners around the world to ship more wood, oversupplying China’s slowing housing market and causing prices to plummet. The price for A-grade logs hit a high of $124 a tonne in March, slumped to $76 and was at $98 last month.
Similarly, lambskin prices collapsed from their record highs in the first quarter of the year as a Chinese crackdown on polluting tanneries and Russian trade sanctions sapped demand.
One commodity that has hit the sweet spot this year, and not due to China, is beef, whose prices have soared to record levels to meet Americans’ insatiable demand for hamburgers amid a shortage in local supplies as US farmers rebuild their herds following a drought.
– Tina Morrison
Auckland house prices go through the roof
Just when you thought it was safe to assume house price inflation was under control, along came the November figures from the Real Estate Institute showing 9.4% year on year growth in Auckland house prices, up from 7.7% in the year to October.
That mightn’t seem like a big change, but it was enough for Reserve Bank Governor Graeme Wheeler to make it clear the central bank is watching carefully. Labour’s defeat removed the threat of a capital gains tax, and seasonal factors could also be at play.
Wheeler emphatically ruled out any new “macro-prudential tools”, along the lines of the loan-to-valuation-ratio lending restrictions that appear to be holding down lower-end house prices while top-end prices leap away.
“We expect to get a better for feel for it around March  or so,” says Wheeler. Watch this space.
– Pattrick Smellie
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