N.Z. firm defends milk safety after chemical find

New Zealand's Fonterra, the world's largest dairy exporter, said Monday that its milk was "100 percent" safe to drink despite tests finding trace elements of an agricultural chemical in milk powder.

Fonterra, which reported revenues of NZ$19.8 billion ($16.6 billion) in the 2012 financial year, said tests had revealed low levels of dicyandiamide (DCD) in some milk samples.

Chief executive Theo Spierings said the DCD levels were 100 times lower than those permitted under European standards and the company was taking steps to reassure international consumers that there were no safety issues.

"Everything that has been exported out of New Zealand is 100 percent safe for consumption," he told Radio New Zealand.

He said suppliers of DCD, which is used to reduce greenhouse gases from dairy herds, had voluntarily agreed to suspend sales of the chemical last week.

Fonterra is sensitive about milk contamination after a partially owned Chinese subsidiary, Sanlu Group, was embroiled in a scandal involving melamine-tainted baby formula in 2008 that killed at least six infants and made 300,000 more ill.

Spierings said Fonterra was in touch with authorities in key markets in Asia about the latest findings.

"We are in contact with Chinese authorities, with Taiwanese authorities and these authorities are adopting the same standard as what we are talking about for these products," he said.

"We will do testing and they will do testing."

With the dairy industry contributing about 25 percent of New Zealand's exports, Prime Minister John Key was keen to stress that the country's milk was safe in order to avoid an overreaction by consumers.

"You'd have to drink the equivalent of a swimming pool full of milk to have any issues whatsoever," he told commercial radio.

"Of course in international markets, which are fragile, there's always concern (about consumer fears)."