A botulism scare that sparked global recalls of Fonterra milk products was a false alarm and there was never any danger to consumers, New Zealand officials said on Wednesday after new tests.
The crisis led to infant formula being taken off shelves from China to Saudi Arabia earlier this month and damaged New Zealand's "clean, green" reputation in key Asian markets.
However, New Zealand's Ministry of Primary Industries said a barrage of tests ordered after it sounded the alarm had confirmed the contaminant was not the potentially fatal clostridium botulinum, but a milder bug called clostridium sporogenes.
"It is therefore not capable of producing botulism-causing toxins," the ministry said in a statement.
"There are no known food-safety issues associated with clostridium sporogenes, although at elevated levels certain strains may be associated with food spoilage."
It said the initial tests had pointed to botulism contamination but subsequent checks on a further 195 samples in laboratories in New Zealand and the United States showed no sign of the bacteria.
"We are very, very relieved that this is not a food-safety issue and that none of the children in the world were affected by this event," Fonterra chief executive Theo Spierings told reporters.
The dairy industry accounts for about a quarter of New Zealand's exports and ministry acting director-general Scott Gallacher said officials had been right to issue a public warning early.
"We needed to act on what we knew at that time," he said. "The information we had then said there was a food-safety risk to consumers and we moved quickly to address it."
Spierings, who rushed to Beijing at the height of the crisis to apologise to Chinese consumers, agreed, saying quick recalls and transparency on the issue had helped reassure anxious parents.
"Not many people would have taken this drastic step but for us, even the risk that one child in the world (falls sick) is unacceptable," he said.
He said the fact that Fonterra effectively "blew the whistle on ourselves" would help restore its image in places such as China, where the baby formula market is worth about NZ$3.0 billion ($2.4 billion) a year to New Zealand.
The Fonterra chief said the tests that incorrectly identified botulism, sparking the global recalls, were carried out by a New Zealand government agency called AgResearch.
Asked if the dairy giant was considering legal action against the agency after the scare saw it scrambling to maintain its international reputation, he replied: "It's too early to say."
Spierings also refused to say whether a senior executive, Gary Romano, who quit after the recalls, and two other managers placed on leave, would be reinstated.
Fonterra faced criticism from the New Zealand government over its handling of the crisis and Spierings said reviews by officials and the company were still being carried out.
The company is sensitive to contamination issues after a 2008 scandal when six children died and 300,000 fell ill after a Chinese company it part-owned illegally laced milk with the chemical melamine.
"The past few weeks have been very difficult for parents in a number of countries, as well as for our customers, our farmers, and our staff," said Spierings.
"For me, as Fonterra's CEO and as a father of three children, I truly believe that in initiating the recall, we took the right decision and did the right thing at the most critical moment.
"Given the same circumstances, and with food safety always front of mind, I would do the same again."