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Current as of 21/11/14 07:40PM NZST

Christopher Adams

The Business Herald’s markets and banking reporter.

NZ export limbo but China demand high

Chinese shoppers pay high prices for Kiwi formula as other dairy goods sit on wharves.

New Zealand formula brands are now back dominating the shelves. Photo / David White
New Zealand formula brands are now back dominating the shelves. Photo / David White

New Zealand dairy exports remain stuck on Chinese wharves, more than three weeks since Fonterra's botulism contamination crisis erupted.

China's powerful import authority - the Administration of Quality Supervision, Inspection and Quarantine (Aqsiq) - is taking an even tougher line than usual with New Zealand food imports in the wake of the scare that began when the dairy giant revealed 38 tonnes of whey protein concentrate, used to make a range of products including infant formula, may have been contaminated with a bacterium that can cause botulism.

One high-profile New Zealand dairy exporter in China, who didn't want to be named, said none of his firm's products had made it across the Chinese border since the beginning of the month.

"It's a disaster," another Shanghai-based Kiwi businessman said. "Most of these things are media beat-ups but this is bad."

A Ministry for Primary Industries spokesman said China had placed a temporary suspension on the import of Fonterra's whey powder, whey protein concentrate and dairy base powder which contain whey protein concentrate.

"MPI is aware that some other exporters are experiencing delays at the Chinese border, and MPI continues to work closely with Chinese authorities to provide information as required and resolve any issues."

In Sri Lanka, a court has overturned a ban on selling and promoting Fonterra products but the company says its operations remain suspended until the situation stabilises.

But while some dairy exporters are struggling to get goods into the country, it appears New Zealand dairy products are falling back into favour with the well-heeled consumers of central Shanghai.

In the upmarket Gateway mall in the city's Xujiahui district, shoppers file past Hugo Boss and Gucci stores and make their way into the local branch of Ole, a high-end food retailer that's a kind of Chinese version of Nosh or Farro.

The store manager said demand for New Zealand baby milk brands had dipped in the direct aftermath of the Fonterra scare and Kiwi formula products had been taken off the shelves for about a week.

But New Zealand formula brands are now back dominating the shelves. Cans of Cambricare formula, from Auckland, were selling for 328 renminbi ($69), while Karicare was slightly less hard on the wallet, at 298 RMB a can.

Three stern-faced attendants oversee the formula section. The valuable products are locked on the shelves.

Our guide said people were happy to shell out a big chunk of the average Shanghai salary - about 6000 RMB - on a can of imported formula.

"With the one-child policy, the baby is the centre of the family," she said, adding that in many cases grandparents looked after the children of working parents so formula was important.

The manager said Karicare had been back on Ole's shelves for a week and demand had returned to normal.

Karicare, sold through official channels in China such as Ole, was not recalled after the Fonterra scare.

Ole stocks a range of New Zealand products, from Comvita honey to Oyster Bay wine.

*Christopher Adams is visiting China as a guest of ANZ.

- NZ Herald

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