WELLINGTON (AFP) - New Zealand on Monday rejected allegations from Sri Lanka that its dairy products were contaminated with a farm chemical, accusing industry rivals of exploiting fears stirred by a recent botulism scare.
Sri Lanka's health ministry has recalled two batches of milk powder made by Auckland-based dairy giant Fonterra, saying it was concerned the product contained the chemical dicyandiamide.
The recall is unrelated to the global safety recall announced by Fonterra earlier this month after tests turned up a type of bacteria that could cause potentially-fatal botulism.
However, New Zealand Trade Minister Tim Groser said the botulism scare had provided ammunition to Fonterra's "enemies" in Sri Lanka, where it is the market leader.
"There are certain dairy companies (in Sri Lanka) that have campaigned for years against New Zealand," he told Radio New Zealand.
"I've been saying in the context of recent events (that) we do have enemies around the world and they have different faces. They'll take advantage of an opportunity like this, we can't be naive."
Dicyandiamide, or DCD, is added to pastures to reduce the amount of greenhouse gases emitted by dairy herds.
New Zealand officials insist it is harmless, but say Fonterra's farmers stopped using it earlier this year anyway.
"So all the milk going into Sri Lanka, by definition, cannot possibly include DCD," Mr Groser said.
Sri Lanka's courts have stopped Fonterra from advertising its products until August 21, when test reports from foreign laboratories are expected to show if the initial findings were accurate.
Meanwhile, Fonterra announced it had appointed former Air New Zealand and Commonwealth Bank of Australia chief Ralph Norris to head an independent inquiry into the botulism crisis.
While no infants fell ill after consuming tainted product, the scandal hurt Fonterra's brand in the massive China baby formula market and dented New Zealand's "100 percent pure" image.
Fonterra has faced criticism in the wake of the contamination, which has been blamed on a dirty pipe in a North Island processing plant, for allegedly releasing information too slowly to customers.
"It is critical that we identify these lessons quickly so our farmers, governments, customers, consumers and unit holders can again have full confidence in Fonterra and its products," chairman John Wilson said.
The dairy industry accounts for 25 per cent of New Zealand's exports, and the government has already indicated it will conduct its own inquiry into how Fonterra handed the crisis.