Christopher Adams

The Business Herald’s markets and banking reporter.

Safety scares hit China trade

Some observers see politics behind recent glitches in NZ's biggest export market

NZ's exports to China were worth $6.9 billion last year. Photo / Thinkstock
NZ's exports to China were worth $6.9 billion last year. Photo / Thinkstock

As New Zealand meat products sat on Chinese wharves last month, unable to cross the border, China's state-run television was broadcasting a series of news stories that raised questions about the quality and safety of Kiwi infant formula exports.

It all begs the question - has this country's crucial trade relationship with the world's second-biggest economy, which overtook Australia to become our main trading partner in April, taken a turn for the worse?

One industry player and an Auckland academic believe the meat hold-up and coverage of formula exports were politically motivated by a Chinese Government that still has a sour taste in its mouth after this year's dicyandiamide (DCD) scare, when in January traces of the nitrate inhibitor were revealed to be present in New Zealand milk products.

Simon Page, managing director of infant formula exporter BioPure Health, said the DCD issue came at the worst possible time as the Chinese Government was preparing for its once-in-a-decade leadership change, which took place in March.

Questions were also raised about how long the news of DCD had taken to come out - Fonterra had known about its presence in milk products in September - and Page said this country was unable to provide a recall of New Zealand milk products requested by China.

"That [the recall] is what would have made them happy ... that would have been easy to explain to their people."

Page conceded a recall would have been difficult to carry out, as New Zealand milk was found in such a huge range of brands sold in China, but said that highlighted the need for some kind of recall framework to be introduced.

Richard Phillips, the former head of the University of Auckland's School of Asian Studies, said people in China were offended that there had not been a stronger reaction to DCD in this country.

Since the 2008 melamine scandal, in which six babies died and thousands more became sick after consuming dairy products tainted with the industrial chemical, Chinese consumers have been highly sensitive to food safety scares and the country's Government wants to project an image of being on top of the situation.

"New Zealanders saw DCD as just a few farms that had a bit of a problem ... from the Chinese [Government's] perspective, they needed to be able to say, 'Well New Zealand has made a commitment to recall products'," Phillips said. "What New Zealand did was say it wasn't a problem."

Paul O'Brien, chief executive of Auckland-based EasiYo, which exports around $12 million of yoghurt in powder form to China each year, said getting products across the Chinese border had become more difficult lately.

But that wasn't because of politics.

Rather, it was the result of new rules introduced by China's Administration of Quality Supervision, Inspection and Quarantine on May 1 and a generally tougher stance on food safety being shown by the new leadership, O'Brien said.

Minister for Primary Industries Nathan Guy said New Zealand and China continued to have a very strong trading relationship.

"That is clear from the fact that in April this year China overtook Australia to become our largest export market," Guy said. "Since signing a free trade agreement in 2008 our exports to China have tripled."

Guy said officials from both countries were working very closely and constructively together.

"China is an enormous economy and one that is growing very fast," he said. "There will always be the odd issue, as exporters find from time to time in the 160 countries they export to. However, the overall picture is incredibly positive."

New Zealand's exports to China were worth $6.9 billion last year.

- NZ Herald

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