The Chinese company responsible for the death of three babies and for sickening more than 6,000 others due to its poisoned milk was a victim of criminal action, the head of its New Zealand joint venture partner said on Wednesday.

Andrew Ferrier, chief executive of the Fonterra farmer cooperative that owns 43 per cent of the San Lu company, defended its failure to detect the toxic chemical melamine in its baby formula before it went on sale, saying it was so unusual that it was not tested.

"You can't test for every poison out there - melamine is not a naturally occurring substance in milk," he told a news conference. "I don't think there's a dairy company in the world that I know of that tests for melamine."

Rattled under critical questioning by reporters for the second time in three days, Ferrier said, "Yes, San Lu missed testing for melamine, if you want to say that - so did everybody else."

Ferrier said Fonterra, the world's biggest single exporter of dairy products, which bought into San Lu in 2006, had been working with its Chinese partner to improve the health and safety of its products.

"We felt we were doing a good thing - that San Lu's products would increasingly become better and better by bringing in the methods of quality control that Fonterra has," he said.

Ferrier said the discovery that milk supplied to San Lu and made into baby formula had been poisoned was "absolutely gut-wrenching" for Fonterra. "This was a criminal contaminant," he said. "This is as bad as it gets in food companies."

Noting that the Chinese government had since identified melamine in the milk products of 22 companies, Ferrier said, "This is a lot bigger than just Fonterra - this is the whole industry."

Ferrier confirmed that San Lu's helpline received calls about sick babies from drinking its products in March but said a battery of tests by different agencies could find no problem because melamine was not suspected.

He said the San Lu board of seven, which includes three Fonterra directors, was told that melamine had been identified on August 2, and although the formula was withdrawn from trade distribution four days later, Fonterra was unable to convince its partner and Chinese officials to announce a full public recall.

Accused of allowing mothers to serve the poisoned product to their babies for six weeks until the news came out, Ferrier said Fonterra had to go along with the wishes of Chinese authorities.

"The only issue was the most effective way to get the product recalled," he said.

"We will never know if we had gone public at the beginning whether it would have made a difference at that time. We made a call - we think it was the right call at that time."

He added, "We were enormously relieved when the Chinese government decided to make it public because we had been urging that from day one. The relief was just massive when we heard that this was going public."