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Sanlu sentencing


The Herald carries a report on sentencing of some involved in the Sanlu milk/melamine scandal in China.

Questions still remain as to whether executives of other dairy companies will face charges such as those faced by the former head of Sanlu.

Fonterra in NZ is making no comment. No doubt in due course we will see another bout of public handwringing by Fonterra.

Questions might be asked as to whether apart from the commodity cycle this scandal as affected the price Fonterra gets for it’s milk powder globally.

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  1. barry permalink
    23/01/2009 09:11

    Excellent news. Sorry for the people facing the bullet, but it is a very worthwhile lesson for not only Fonterra management, but also other NZ corporate leaders that they should take their responsibilities more seriously. Its obvious that the fonterra reps at Sanlu had no idea what was going on and they must have known that they were not doing their job properly. Its also become obvious recently also that Fonterra here in NZ had no idea what was going on either.
    A study of the top 20 companies in NZ and their share values would show just how badly they are run – and they are run badly because there is no sanction for crappy management. Examples are things like the Air NZ purchase of Ansett (no investigation before hand) or the horrible decisions of Telecom and Fletcher to make major offshore investments just before that market sector crashes.


  2. bobux permalink
    23/01/2009 08:29

    It is very unlikely that the Sanlu affair had any impact on world prices for NZ milk powder, any more than the questionable dealings of (for example) Shell in the Nigerian Delta affect the price Shell obtains for its crude oil. Milk power is a commodity, pure and simple, and ‘branding’ has a negligible effect on price.

    Interestingly, a contact in another food industry was in China pre-Christmas, and asked some of his colleagues there what they thought of the melamine scandal. They strongly condemned the Chinese companies and government officials involved, but had either not heard of or didn’t attach blame to Fonterra.

    Initially he thought this may hace simply been Chinese politeness and unwillingness to cause him loss of face. But when asked what baby formula brands they trusted, most of them named Anchor, Fonterra’s ‘made in NZ’ brand.

    I think the lasting effect on Fonterra will be negligible, but through good luck rather than good judgement.


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