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Fonterra is setting up a multi-million dollar project to help pregnant Chinese women and mothers in response to the poisonous milk crisis.

Sanlu, a Chinese dairy company 43% owned by Fonterra, is one of more than 20 firms caught up in the scandal, in which the industrial chemical melamine was added to watered-down milk to boost protein levels.

Fonterra's CEO Andrew Ferrier said: "We're obviously shocked by the degree of tragedy and we think that this is one way we can make a gesture that will help over the long-term in infants and maternal mother health."

Fonterra will donate $5m to the China Soong Ching Ling Foundation over five years for a cooperative charity project to provide medical care and advice to pregnant women and the mothers of infants in rural communities.

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