Dairy giant probes IT’s role in botulism scare

A change of IT systems may have exacerbated Fonterra's contamination crisis

The world’s largest dairy exporter, New Zealand cooperative Fonterra, is reviewing its IT systems after a botulism contamination scare saw its products partially banned in China and totally banned in Russia this month.

Little is known about the systems involved and Fonterra isn’t talking.

“Any questions around our systems will be addressed as part of our internal review,” a spokesman said.

Hints that IT systems may have contributed to the dairy processor’s problems first emerged at media conferences last week, with one report noting that a change in computer systems at facilities in Australia may have exacerbated to the issue, possibly affecting its ability to identify or track batches.

While the original contamination occurred in New Zealand - the company attributed it to a dirty pipe in one of its plants in the North Island - it was reportedly first discovered at its Darnum plant east of Melbourne, in the state of Victoria. 

The affected ingredient, whey protein concentrate, was exported from New Zealand to be blended there into infant formula.

While Fonterra isn’t commenting on its IT systems, the company has over a long period been standardising onto SAP enterprise software in a project that has cost hundreds of millions of dollars.

Fonterra spent around NZ$230 million in a project dubbed “Jedi” and completed in 2006. After a pause, it announced in 2010 it would invest NZ$110 million more to spread SAP into its consumer brands business and manufacturing plants on both sides of the Tasman.

Documents posted (PDF) by the company for its suppliers indicate its Australian operations were being shifted to SAP in March and June 2013, the same time as the first detection of the contamination at Darnum.

That could be a coincidence.

An SAP spokesman said: “We are of course at the ready to support Fonterra as needed, but there is no immediately evident link between the handling of the contamination and any SAP system.”

Questions remain about the four-month time-lag between that first detection, in March, and the public announcement and recall of contaminated batches of whey protein used as an ingredient in an array of other products.

That announcement was made at the beginning of August.

Fonterra said the original detection at Darnum did not identify the contamination as dangerous because there were many other possible sources of such an alert other than botulism.

Fonterra acquired Darnum as part of its 2005 full takeover of Bonlac Foods. Bonlac was a user of JD Edwards enterprise software, acquired by Oracle in 2005.

In addition to Fonterra’s own enquiry into the cause and management of the contamination, the New Zealand Government has announced it will conduct a separate ministerial enquiry.