The Government has announced that five New Zealand companies have been approved to export infant formula to China, which means eight have failed to make the grade.
Primary Industries Minister Nathan Guy said these five manufacturers represent about 90 percent of the country's infant formula exports to China by volume.
According to the official Chinese website, eight New Zealand manufacturers have been registered to supply infant formula or ingredients for infant formula to the Chinese market.
They include five formula manufacturers:
- GMP Dairy (the only one to clear the initial Chinese audit);
- Nutricia;
- Canpac (a Fonterra subsidiary);
- Sutton Group;
- Dairy Goat Co-operative.
Three manufacturers of ingredients used in formulas are also registered:
- Fonterra;
- Westland Milk Products;
- Gardian.
According to GMP Dairy, about 40 manufacturers world-wide have been registered, including five in France, six in Holland, and two in Australia.
The Infant Nutrition Council told Radio New Zealand that 35 formula brands aligned with the five manufacturers have temporary approval to export to China.
Mr Guy said New Zealand officials have been working with manufacturers and Chinese officials to meet stringent new regulations before Thursday's deadline.
He said other manufacturers can be registered after Thursday if they meet the new requirements and while the news is positive for manufacturers, it will be tough, he said, for brand owners who don't also manufacture the formulas themselves, so can't guarantee the sort of food safety traceability that Beijing is now demanding.
Mr Guy said China wants to know about the whole production chain from manufacturer right through to brand owner.
"There's got to be regular audits by the brand owner, they need to ensure that there are quality and safety assessments, from the brand owner back to the manufacturer. They want more detail on product formulation and overall a recall plan."
Mr Guy said it was good news that 90 percent of New Zealand exports would still get through, but admitted that some smaller brands would not survive.
"I'm always an optimist that we'll get the next eight manufacturers across the line, there are some corrective actions that need to be undertaken and MPI are working closely with those manufacturers to get that done as quickly as possible."
Rule changes too fast for some exporters
Infant formula exporters who have been suddenly shut out of the lucrative Chinese market say the rules have changed too fast for them to comply.
The New Zealand Infant Formula Exporters Association says there's now some clarity for the approved exporters and the brands associated with them but others are confused and frustrated.
Association director Michael Barnett said the conversation about proposed changes had been going on six months but change had only occurred in the last 10 days and it was still not clear what the new rules were.
"It's occurred at a pace that's made it difficult for compliance at the level that the Chinese are demanding, so it is a frustrating and testing time for those exporters."
Mr Barnett said some small brands that relied wholly on the Chinese market would struggle to survive.
GMP Dairy was the only formula manufacturer in New Zealand to pass China's audit in March and a spokesperson for the company said while it was happy about that, it was still a very stressful time for the industry.
Meanwhile, on Thursday morning Nutricia announced it was acquiring the spray dryer of Gardians, located near Balclutha, and the blending, packing and can-forming activities of the Sutton Group in Auckland.
Tough regulations good for consumers - KiwiMilk
The head of a dairy export company affected by the new regulations says the changes are good for consumers and New Zealand.
Marco Marinkovich said his company KiwiMilk suspended exports to China when it became apparent its government was going to require better traceability of infant formula.
"The infant formula standards should rise from dairy grade to pharmaceutical grade because you are feeding babies and there's no room for error."
Mr Marinkovich said KiwiMilk was building a factory that would create products that could be tracked from the farm to the retailer.
He said the new regulations were an opportunity for New Zealand to prove its products were world-class.
