The stock feed load arrived at Northport on June 28 on a ship which previously docked at Timaru.
The ministry said no insects were found during a routine inspection at Timaru.
But an inspection at NorthPort discovered two adult beetles of the genus Cryptamorpha.
New Zealand already has six to seven kinds of Cryptamorpha, but there was a chance the hitch-hiker was carnivorous, with potential to prey on small native invertebrates, the ministryI said.
"I would applaud MPI for finding the beetles in the shipment. However, we are becoming increasingly aware of bio-security incursions," Clark said.
"Federated Farmers will be working with MPI to try to understand how, given the importance of bio-security, this continues to occur.
"It is of particular concern to us that the ship has called at Timaru and there doesn't seem to have been any insects found.
"Was some of the product unloaded there, and were there undetected insects in that cargo?"
At Northport, the palm kernel expeller was taken from the ship by trucks to "MPI approved transitional facilities", a ministry spokeswoman said.
It would be taken to farms and fed to dairy cows.
"Once it is treated and meets biosecurity requirements, it is granted biosecurity clearance and is allowed to be distributed."
Northport spokesman Peter Heath said palm kernel expeller was imported under strict MPI controls but did not normally require fumigation in New Zealand.
Ships were checked by MPI as a matter of course to ensure there were no biosecurity issues.
Heath confirmed the shipment was being treated in batches by fumigation company Genera at a facility outside the port.
Palm kernel expeller was a mulchified byproduct of palm kernels after the oil was extracted.
The contaminated shipment was imported by Agrifeeds, a partially Fonterra-owned company.
A Fonterra spokeswoman told the Advocate palm kernel expeller shipments were treated at the country of origin or at sea, at least 21 days before arriving in New Zealand.
She said that information was on MPI's website.
However, Clark said it was a misunderstanding that PKE was heat-treated. He said the product got hot during processing, but that was not enough for bio-security reasons.
"Palm kernel expeller is not heat treated, that is the fundamental failing of the logic of the health standard."
The fibrous material became heated during the compression process, he said.
It was then sieved and transported to storage facilities, and, possibly some time later, loaded on to ships - "providing multiple different opportunities for that product to become contaminated".
MPI said live pests were found in palm kernel expeller bulk vessels "from time to time".
There have been several cases in past years of shipments being refused entry or requiring methyl bromide treatment once in New Zealand.
Cargoes have been found to be contaminated with insects, soil, weeds, seeds, pieces of machinery, parts of small animals and cigarette packets.
