However the report noted improvements to the system could be made, but most of the 29 recommendations it made were "unconnected to this incident and relate to the challenges that lie ahead".
Wider issues bought to light by the report included "a shortage of people with dairy processing and regulatory expertise at every level of the regulatory sector" and "insufficient investment in food safety research".
Given the emergence of China as New Zealand's largest market for dairy products the report's authors' noted " repeated calls for a boost in ministry resources" in that country and other key markets.
Primary Industries Minister Nathan Guy said the finding that New Zealand's dairy food safety regulations were sound was of "fundamental importance to reassure our offshore markets".
The Government's response will include up $12 million investment each year to implement the recommendations including the establishment of a centre for food safety science and research.
Federated Farmers' dairy chairman Willy Leferink said his organisation with pleased with the findings.
"Whilst the report puts some minds at ease, confirming the regulatory system is not to blame, it also highlights the need for a stronger food safety system and a stronger understanding of the markets we deal with," he said.
"If our dairy industry is to continue to go from strength to strength, we need to invest more into the framework of how we operate here and overseas. As we diversify into foreign markets, we need people that understand them.
"I am thrilled at the recommendations to simplify the regulatory processes and invest in more science and research. Food safety is paramount for the dairy industry and it has long been overdue that we put our money where our mouth is.
"This substantial investment of $8-12 million will go a long way to rebuilding our reputation overseas," Mr Leferink said.
But Labour's Primary Industries spokesman Damien O'Connor said the report showed Government cost-cutting was to blame for the botulism scare.
"MPI dropped the ball on food safety and New Zealand's international reputation has been permanently damaged."
He said the report was a damning indictment on the Government's creation of the Ministry for Primary Industries.
"If the ministries of agriculture and forestry, fisheries, Biosecurity New Zealand and the Food Safety Authority hadn't been merged into one super-ministry in 2012, millions of taxpayer dollars would not now have to be spent ensuring it can perform its basic functions."
Mr O'Connor said the report found MPI's role in overseeing the safety of food exported to international markets became blurred amid its many other roles.
Noting the report's recommendation for swift legislative action to strengthen the food safety regime, Mr O'Connor said Labour would work with the Government to make sure international exports partners retained confidence in New Zealand products and regulatory systems.
The report whose authors were led by Miriam Dean QC also recommended fast-tracking the revision of regulatory requirements for the manufacture of infant formula.
Ms Kaye said work was already underway on that including fast tracking necessary legislation which would be passed early next year.
The report, which was peer-reviewed by international experts, is separate to the compliance investigation being undertaken by the Ministry for Primary Industries (MPI). The next stage of the inquiry would look into the particulars of the incident and would be released after the completion of the MPI" compliance investigation.
Prime Minister John Key will lead a delegation to China to present the final reports next year.
In the meantime, Mr Guy said Chinese authorities had now seen and welcomed this morning's report, parts of which were translated into Mandarin for their benefit.
The incident caused widespread alarm when in early August, , Fonterra announced test results suggested botulism-causing bacteria could be present in three batches of why protein produced at its Hautapu plant.
That was five months after the dairy co-operative first became aware of a possible "quality issue" with 38 tonnes of the whey protein.
The scare prompted a widespread product recall by several companies which had used the product.
Further testing revealed the whey protein had actually been contaminated with clostridium sporogenes, which does not present a food safety risk.
In September Fonterra found contamination was caused by reprocessing whey protein after plastic was found in it at Hautapu.
Key recommendations to improve food safety
# Strengthening capability in emerging export markets, particularly China.
# Establishing a centre of food safety science and research.
# Increasing dairy processing and regulatory capability.
# Establishing a food safety and assurance advisory council to provide high level independent advice and risk analysis.
# Fast-tracking work to consolidate and simplify legislation and regulations.
