No bans on NZ dairy products after poison threat :govt

WELLINGTON - New Zealand has received no indications that any foreign countries would stop buying its dairy products following a threat to poison infant formula with a toxic pesticide, the agriculture ministry said on Thursday.

Countries including China, the biggest buyer of New Zealand dairy products, were not closing the door on shipments, a top official from the ministry told Reuters, as police track down the sender of letters to dairy giant Fonterra and the national farmers' group which were accompanied by infant formula laced with the pesticide 1080.

"Last night we had been speaking to our counterparts in overseas markets, and as of this morning, none of them indicated that any product was going to be stopped," said Scott Gallacher, deputy director-general of the Ministry of Primary Industries.

Following the announcement of the police investigation earlier this week, China has said it would increase scrutiny of milk powder imports from New Zealand, the world's largest dairy exporter, which depends on the commodity for around a quarter of its export earnings.

While China has stopped short of placing restrictions on imports, some smaller New Zealand infant formula marketing companies said they had seen a fall in orders for the product commonly prized among China's growing middle class since the threat was publicised.

A few domestic milk powder and infant formula processors said they had not seen a fall in demand for their products so far, while adding that ramped-up Chinese scrutiny may delay exports by around two to four weeks.

"The feedback from the market has been very quiet. We've only had one direct contact from one customer in China who has requested that we test for 1080 and make sure the results are on (shipping certificates)," said Richard Wyeth, CEO of Miraka, which processes milk powder and UHT milk products.

But he added: "We only make commodity powder, so we're not seeing the full impact that others would be." Infant formula processors have said they anticipate stable demand from overseas buyers, while Fonterra which processes nearly 90 per cent of the country's milk collection, will not comment on offshore demand for its products.

MPI's Gallacher said dairy processors were informed of the investigation last month, the same time that overseas government agencies and big infant formula brands including Nestle , Abbott Laboratories and Mead Johnson were told.

Larger companies were informed before smaller ones, which were told by their suppliers after the threat was publicised, as dairy processors and the government believed the impact to their supply chains warranted an early heads up, he added.