Christopher Adams

Christopher Adams is the Markets and Banking reporter for the New Zealand Herald

Pressure on exporters of baby formula

Firms scramble to make required changes for China's new rules before May 1 deadline.

Synlait chief executive John Penno. Photo / Richard Robinson
Synlait chief executive John Penno. Photo / Richard Robinson

New Zealand infant formula exporters are having to take "corrective actions" over issues ranging from a dirty computer keyboard to factory air quality and temperature control in order to comply with strict new Chinese import regulations, a top official says.

The Government announced last week that 12 of this country's 13 baby milk manufacturers had to carry out changes at their production facilities before they could become registered for export under the rules that come into force on Thursday.

The new regulations, which apply to all countries selling infant formula in China, follow an audit of local manufacturing plants by Chinese officials last month.

Ministry for Primary Industries deputy director-general for China relations Roger Smith travelled to Beijing at the weekend to help negotiate market entry for New Zealand's fast-growing infant formula industry, which exports more than $200 million of the lucrative dairy product into the Chinese market annually.

Inconsistent air pressure at a manufacturing facility was another issue one of the manufacturers was having to take corrective measures over, while the Chinese auditors had also found incorrectly labelled chemicals at one of the plants they visited, Smith said.

He said companies that were not registered by May 1 would be unable to export product manufactured after that date.

"That obviously puts a lot of pressure on everybody to try and get as many of the manufacturers sorted by May 1, which is not very far away," Smith said.

He would not say how many of the 13 manufacturers were expected to be registered by the Thursday deadline.

"That is a decision that has to be taken by the Chinese," he said. "We'd like to get everyone approved by May 1 but that's a very big ask ... we believe all of the manufacturers will be approved."
Roger Smith, Ministry for Primary Industries deputy director-general for China relations

Smith said infant formula companies were not expected to end up with product stuck on Chinese wharves - a problem faced by New Zealand meat exporters last year - as a result of the changes.

The 13 manufacturers include Fonterra, South Island dairy processors Westland Milk Products and Synlait, as well as Auckland-based exporters Sutton Group and New Image. A ministry spokesman declined to name the one manufacturer that had been immediately able to comply with the new regulations.

Synlait chief executive John Penno told the Business Herald last week - before the details of the new regulations were announced - that the company expected a delay in getting registered because a new canning line was being built at its Canterbury facility that would not be completed until June.

The firm would work through the registration process after the line's completion and had "made sure with our customers that we can bridge any gap" that resulted from not being registered after May 1, Penno said.

A Fonterra spokeswoman said the company was not yet registered but expected to achieve its registration before the deadline.

The Chinese authorities have also indicated that infant formula brands that have their goods produced at contract facilities - of which there are about 70 in New Zealand - will have to demonstrate "clear control" of the manufacturing process and a "close association" with their manufacturer in order to become registered.

Geoffrey Babidge, managing director of A2 Milk, which has its A2 Platinum infant formula brand manufactured by Synlait, said there had not been any surprises in last week's announcement.

"We're confident in the processes we're working through."

- NZ Herald

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