China buys up big in NZ baby milk

New Zealand supermarkets were forced to ration baby formula to customers to stop exporters from clearing the shelves and selling to China. Photo / Michael Dickison

Auckland supermarkets are selling baby milk formula to Chinese exporters thousands of cans at a time while rationing them to other shoppers.

This bulk trade has been unknown to export authorities and has now sparked an investigation.

As mothers fret online about disappearing stocks of formula, receipts obtained by the Weekend Herald show that major supermarkets have been allowing bulk sales to select clients, including a recent sale at Pak'n Save worth more than $170,000.

The purchase was made by an exporter who operates on a Chinese website similar to Trade Me and consisted of a single transaction for 5346 cans of Karicare baby formula and 2220 packets of Anchor milk powder.

When told of the transaction, Ministry of Agriculture and Forestry manager for food imports and exports Bill Jolly said that it "puts a different context" on the trade of New Zealand baby formula to China and that investigators would probe the issue.

There has been a premium in China for New Zealand-manufactured dairy products since the deaths of Chinese children who drank milk tainted with the industrial chemical melamine.

New Zealand supermarkets were forced to ration baby formula to customers to stop exporters from clearing the shelves and selling to China.

"[The evidence of bulk sales] has stimulated my interest. It has the potential to cause quite a few concerns," said Mr Jolly.

The ministry's director of compliance and enforcement, Geoff Allen, said only certified exporters were allowed to sell in large amounts.

"I'm surprised by the size of these particular purchases," Mr Allen said.

Ordinary Pak'n Save shoppers are limited to as little as three cans of formula at a time due to supply shortages. In the past two weeks, New Zealand mothers have taken to Chinese-language community website SkyKiwi in search of formula.

"My son has started on Karicare, but yesterday we couldn't find it on the shelves in Mt Albert. I tried Albany today and again there was no milk [formula]," wrote a mother.

Xiao Dai said her sister was struggling to find baby formula for her child. "Has anyone seen Karicare's first phase of milk powder in supermarkets? Where can I buy it?"

Chinese website SkyKiwi user Benjamin was outraged when told of the bulk sales to exporters.

"How can our supermarkets sell these huge amounts to those bloody traders and then put up an apology sign when they are out of stock for New Zealanders?"

A manager at an East Auckland supermarket, who refuses to sell in bulk, said stocks of baby formula for ordinary shoppers had been severely squeezed.

"We order maybe 100 cartons for our normal, regular customers and we're only getting supplied 10 cartons, 20 cartons," the manager said. "There's a huge shortage at the moment because there are so many people selling hundreds of cartons to people who ship it overseas. It just puts a strain on the New Zealand market."

A Chinese exporter's website allowed orders of up to 6100 cans of baby formula at a time. Boxes of six $26 cans of Karicare Gold+2 were sold for more than $210, creating a margin of almost $55 per minimum order.

The exporter said that it was a registered company in New Zealand and paid taxes through Inland Revenue.

The manufacturer of Karicare products, Nutricia, said it could not guarantee the quality of products shipped outside New Zealand.

All its sales in New Zealand went through supermarkets, and it had no role in any subsequent sales arrangements, it said.

But the company tried to supply all orders it received from supermarkets so there was enough stock to meet local demand.

A spokesman for Countdown owner Progressive Enterprises said its stores only allowed bulk sales when there was enough stock for ordinary customers.

The bulk sales came from supplies that were separate from shelf stock, he said.

"We allow bulk sales in our store on all products, not just baby formula.

"Whether someone needs paper towels for an event, or ice or meat for a barbecue, we allow special orders," the spokesman said.

Anyone could approach the company to buy in bulk, but the priority at its supermarkets was to have stock on the shelves, he said.

Quotas had been imposed on baby formula to make the products more consistently available to shoppers, he said. "We put the limit in place to basically make sure that all our customers have equitable access to the products."

Pak'n Save owner Foodstuffs' Auckland general manager retail, Rob Chemaly, responded to questions asking why some customers were given special dispensation with a statement that "in general" the company did not advocate bulk sales of baby formula.

"It is important to ensure sufficient product is available for all customers," Mr Chemaly said.

In response to further questions, Mr Chemaly confirmed that Foodstuffs was aware of the bulk sales for the purpose of export.