Threat to contaminate New Zealand infant formula - police

WELLINGTON (Reuters) - Suspected environmental activists have threatened to contaminate infant formula in New Zealand, the world's largest dairy exporter, in an attempt to halt use of an agricultural poison on pests such as rats and possums.

New Zealand police said on Tuesday several letters were sent to the national farmers' group and dairy giant Fonterra in November accompanied by packages of infant formula laced with the poison 1080, demanding that use of the poison be stopped by the end of March.

But it said no traces of the poison were found in any products in factories. The Ministry of Primary Industries (MPI) also sought to assure consumers, saying the chances of contamination were extremely low.

"We are confident that New Zealand infant and other formula is just as safe today as it was before this threat was made. People should keep using it as they always have," said MPI Deputy Director-General Scott Gallacher.

Police said security of production facilities and the supply chain had been increased.

"Whilst there is a possibility that this threat is a hoax, we must treat the threat seriously and a priority investigation is underway," said Police Deputy Commissioner Mike Clement in a statement. 

He said no further letters had been received after the initial batch and the matter was being treated as blackmail rather than terrorism.

The poison 1080 is extremely toxic and used extensively through New Zealand to control pests such as stoats, rabbits, deer, rats, and possums, which cause damage to wildlife and forests.

Conservation groups have long criticised its use because of the unintended impact on native wildlife, and there have been occasional protests against its use and unsuccessful campaigns to have it banned.

The New Zealand dollar slipped to a low of $0.7278 as a trading halt was placed on the securities of Fonterra, A2 Milk and Synlait Milk dairy companies ahead of the statements.

The kiwi picked up and last traded at $0.7293, while units in Fonterra and smaller producer Synlait ended trading between 1 and 2 percent lower.

Dairy products account for about a quarter of New Zealand's export earnings, and more than 7 percent of the country gross domestic product.

The scrutiny on New Zealand infant formula has been heightened since a false alarm in 2013, when concerns the product might have been contaminated by the toxin causing botulism caused a worldwide product recall.

(Gyles Beckford and Naomi Tajitsu; Editing by Muralikumar Anantharaman)