The Business Herald’s markets and banking reporter.

NZ formula could be stuck on Chinese wharves

China is pushing to restore consumer confidence after food safety scares including the 2008 melamine scandal. Photo / Christopher Adams
China is pushing to restore consumer confidence after food safety scares including the 2008 melamine scandal. Photo / Christopher Adams

New Zealand infant formula could end up stuck on Chinese wharves - like Kiwi meat exports were last year - as a result of a new development in the regulatory debacle facing exporters of the lucrative dairy product, says the head of an industry group.

The Ministry for Primary Industries' director of market assurance, Tim Knox, told exporters on a teleconference this morning that China's import authority had issued a statement advising that only baby milk made by manufacturers registered under the new Chinese infant formula rules that came into force on May 1 would be able to export product into China.

The ministry had previously advised companies that all product made before May 1 could continue to be exported to China regardless of the manufacturer's registration status.

"Obviously that is a significant difference of requirement and has potentially significant impact for the manufacturers and brand owners who are not currently registered on the CNCA [Certification and Accreditation Administration] list," Knox told exporters.

"That was a very disappointing piece of news and was out of the blue."

Only six of New Zealand's 13 infant formula manufacturers - including Fonterra, Westland Milk Products, Nutricia and GMP Pharmaceuticals - were approved in the first round of CNCA registrations, published last week.

Canterbury-based Synlait and Auckland's New Image are among the companies who did not make it on to the list.

Many New Zealand infant formula brand owners who do not operate factories are also yet to gain registration.

The new Chinese requirement could prove a major difficulty for unregistered companies that currently have product in transit to China - or at the Chinese border - that was previously understood to be able to enter the country under the new rules.

New Zealand Infant Formula Exporters Association chairman Michael Barnett said infant formula exporters would end up with product stuck at the Chinese border as a result of this new development.

Kiwi meat exports were held up at the Chinese border for weeks last year as a result of confusion over import documentation.

"We lost a whole lot of ground this morning," Barnett said.

Knox told the teleconference that he understood the latest regulatory change came about " as a result of differences of view between the technical departments in the China system".

"Unfortunately no one decided to tell us of this change before it was published on Sunday."

Knox said New Zealand officials had reached an agreement with their Chinese counterparts to "deal with product that is in transition on a case-by-case basis".

The Chinese authorities were willing to consider information about product produced by non-registered manufacturers that was held up at the border, in transit to China or about to leave New Zealand, he said.

New Zealand's retail-ready infant formula exports are worth around $200 million.

The Ministry said last week that the manufacturers that had already achieved registration were responsible for around 90 per cent of this country's baby milk exports.

- NZ Herald

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