The Ministry for Primary Industries would continue to work with the bread industry to achieve a fortification rate of up to 50 per cent of packaged bread and help them develop a voluntary code of practice to meet the requirements in the relevant standard.
Bakeries using folic acid receive annual visits from auditors and those visits would include checks on how they were fortifying to meet the New Zealand (Permitted Fortification of Bread with Folic Acid) Food Standard 2012.
New Zealand Organisation for Rare Disorders executive director John Forman said up to 20 babies a year would die or be seriously disabled by NTDs because of the Government's decision.
"In the last three years, industry has only introduced fortification in 12.5 per cent of their products and has failed to deliver a promised public awareness campaign. Their commitment has been lacking and I have little faith that they will raise their game now," he said.
"The minister's decision is a missed opportunity to take decisive action on this important public health issue and mandate a simple and effective way of reducing risk for women and their babies," Mr Forman said.
Spina Bifida New Zealand (SBNZ) said the decision contravened the United Nations Convention on the Rights of the Child.
"The NZ Government has a legal responsibility to protect children from disability before birth and all circumstances which might result in disability at the time of birth.
"SBNZ only hopes that the minister and the New Zealand Association of Bakers will now bear that responsibility on their shoulders and that parents of babies diagnosed with spina bifida are given access to the [Ministry of Health] High Cost Treatment Pool to access prenatal surgery internationally," executive director Diane Belcher said.
But the NZ Food & Grocery Council called the decision common sense.
"It's the right thing to do, based on the current science, which is increasingly not clear. And as long as that is the case, it doesn't make sense to mandate fortification and effectively expose every man, woman, and child by artificially raising levels of folic acid in an attempt to reach a small number of women," chief executive Katherine Rich said.
"There is enough evidence to suggest our folate levels have increased considerably under voluntary fortification and that with more time to continue this work that trend is expected to continue."