All eyes are on New Zealand's Fonterra, following the weekend recall of infant milk products and sports drink due to the discovery of contamination of whey used in the manufacture of these two items. The bacteria found could lead to botulism, which could be fatal.

China has banned the import of New Zealand powdered milk, and being New Zealand's largest market for its milk product, the action could have a negative impact on Fonterra's finances, but also New Zealand's dairy industry as well as global milk prices.

Fonterra, owned by 10,600 New Zealand farmers with a revenue of NZ$9.87 billion, accounts for 30 per cent of the world's dairy exports. Its major brands include Anchor milk, Tip Top ice cream, Anlene, Anmum and Mainland cheese.

News of the botulism scare as well as the blanket ban on all New Zealand milk powder for exports made by New Zealand Trade Minister Tim Groser has caused the Kiwi to hit a month-low of 76.99 U.S. cents on Monday's opening, down from Friday's trade of 78.87 cents.

Mr Groser justified the blanket ban, explaining, "It's better to do blanket protection for your people then wind it back when we, our authorities, are in a position to give them the confidence and advice that they need."

Fonterra has recalled internationally 900 tonnes of the contaminated products and in New Zealand recalled two Karicare infant formulae.

New Zealand's Ministry for Primary Industries had assured there are no cases of infant botulism in the country linked to the recalled products, while Prime Minister John Key said that he is disappointed with Fonterra waiting until Friday to alert authorities, but he stressed it is not time for recrimination.

"Today is the day to make sure consumers have the best information. The single most-important thing for Fonterra is that consumers have confidence in their products and that's all about food safety," Stuff.co.nz quoted Mr Key.

The fallout continues as Russia joined China in banning all New Zealand dairy imports even if none of the contaminated products were exported to Russia. China also included Australian dairy products too in the ban.

Fonterra is not only the largest company in New Zealand, it is also the largest milk processer in the country, accounting for 95 per cent of all milk solids from dairy farms. With the expanded ban on New Zealand imports, also expected to be affected are other large dairy companies such as Tatua Co-operative Dairy Company, Westland Milk Products and Synlait.

Latest data said that New Zealand has 4.2 million dairy milking cows and 5.26 million dairy cattle in 2007 and 12,786 dairy farms in mid-2005.

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