Australian supermarkets are dropping New Zealand-made products even if an alternative cannot be sourced locally, producers say, as concerns increase about whether the patriotic shut-out on foreign goods could expand to more product lines.
New Zealand food and beverage makers said Australian supermarket chains Coles and Woolworths were competing to be the "most Australian" company and this was leading to extreme measures to "de-list" foreign tenders.
One major exporter said that the supermarkets, influenced by a fervent Buy Australia campaign, were eliminating more New Zealand products "by the day".
Australian Prime Minister Tony Abbott refused to intervene in the supermarket shut-out after Prime Minister John Key raised the issue in a high-level meeting in Sydney yesterday.
Mr Key said the bans on New Zealand products appeared to breach the spirit, if not the terms of the trans-tasman Closer Economic Relations (CER) agreement.
Labour leader David Cunliffe said Mr Key had not negotiated hard enough and that the campaign was a contravention of CER because each country was required to treat the other's products the same as their own.
Mr Abbott said that companies affected by the Buy Australia campaign could make a complaint to the Australian Commerce Commission.
So far the ban had affected New Zealand-made cheese, frozen foods and vegetables which were sold under the "house brand" labels.
Export NZ spokeswoman Catherine Beard said house brands were the easiest goods to exclude but Australian supermarkets would find it more difficult to get rid of popular brands such as Watties. Coles upset its customers when it removed New Zealand-made Mainland Cheese from its shelves in 2012.
But Food and Grocery Council chief executive Katherine Rich said some branded products were now also being knocked off shelves and local exporters were getting nervous that the shut-out could spread more widely.
She said cereal exporters and non-food manufacturers such as toilet tissue and hair product makers were worried.
Coles and Woolworths made up 80 per cent of the Australian retail market. If the campaign was sustained, it could cost New Zealand business hundreds of millions.
Ms Rich said frozen food producer Talleys has had 40 products removed from shelves and replaced by Australian products. Suppliers also discontinued 10 Talleys products, despite the fact that local suppliers could not replace them.
Talleys joint managing director Michael Talley said his company had exported 900 tonnes of frozen spinach a year to Australia until it was blocked.
"They no longer have items in their brand range merely because there is no Australian producer."
He added: "The items for their policy of buying only Australian is being expanded by the day."
The company's meat, fish, vegetables and shredded cheese products had been excluded.
Mr Talley backed a formal complaint under the CER agreement and said his company had already provided a legal opinion to the Government.
Some suggested that New Zealand should fight back by shunning Australian goods.
Labour Party food safety spokesman Damien O'Connor said New Zealand should introduce country of origin labelling so that New Zealanders could know if they were buying Australian products and "return the sentiment".
Countdown, which is a Woolworths brand, was reported to be facing a backlash from some New Zealand shoppers who felt it was disloyal.
Buy New Zealand Made spokesman Scott Wilson said his organisation would not become more aggressive or outspoken in response to the Buy Australia campaign. It worked with a separate organisation known as Australian Made. Both groups encouraged local buying but did not support the exclusion of foreign produce.