Christopher Adams

The Business Herald’s markets and banking reporter.

Baby-milk makers on edge

Rumours fly of Chinese plans to limit number of importers as audit of NZ facilities looms.

Fonterra and Westland Milk Products are among the firms whose facilities will be audited. Photo / Christopher Adams
Fonterra and Westland Milk Products are among the firms whose facilities will be audited. Photo / Christopher Adams

Infant formula exporters are on edge before an audit of local manufacturing facilities by Chinese officials next month, which takes place as China conducts a major overhaul of import requirements for the lucrative dairy product.

Industry players say rumours are rife, including that our biggest trading partner may limit the number of New Zealand formula brands entering China to 10 and that only brands with retail sales in NZ may soon be eligible for sale in the Chinese market.

Marco Marinkovich, founder of Auckland infant formula exporter KiwiMilk Nutrition, said small companies like his were in "a state of limbo" as they waited to find out what import requirements or restrictions might be introduced. "There's a whole lot of unanswered questions."

The Chinese Government wants to bolster consumer confidence in infant formula products and has already shut down domestic manufacturers that cannot guarantee the quality of their raw milk, while also prohibiting the bulk importation and repackaging of baby milk in China.

The Ministry for Primary Industries said four officials from China's Certification and Accreditation Administration would arrive next month and visit seven dairy and infant formula-making facilities.

Fonterra and Westland Milk Products are among the firms whose facilities will be audited. One laboratory and a farm will also be visited.

It is a systems audit, meaning only a sample selection of manufacturing operations will be inspected.

The audit comes ahead of a new requirement that all dairy and infant formula manufacturers producing product for China be registered with the Chinese authorities by May 1.

The audit and registration process applies to all countries exporting products to China, not just NZ, and the ministry said it was not a response to Fonterra's botulism false alarm.

NZ Infant Formula Exporters Association chairman Michael Barnett said businesses were facing a lot of uncertainty before the audit.

He blamed big industry players - whom he would not name - for spreading rumours that the Chinese audit process would "knock out the little guys". That was an unlikely result of the audit, Barnett added.

Fonterra's group director for food safety and quality, Ian Palliser, said the Chinese were expected to inspect three of the dairy co-op's sites, including its Hamilton Canpac facility, where infant formula is made.

"It's all part of a reasonably normal process," Palliser said. "What's new about it is this is the Chinese doing it for the first time."

- NZ Herald

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