"It's important that people are open and transparent about what they are selling and the problem with the other system is that .... it is not clear to the consumer."
An insider in the Wairarapa honey industry, who did not wish to be named, said "blending" bush honeys with manuka and then selling it as manuka was a widespread problem.
"It's happening nationwide. We are getting people buying up large amounts of bush blends that they can put into some existing manuka and then they are selling it as a manuka 5 plus."
"There are variations in standards that are applied by various producers and there is a better return to the bee keepers if they can blend their honey down - and it shouldn't be happening ... MPI needs to take serious look at the work they've done so far and realise they haven't addressed the fraudulent product in the market."
If it was going to be labelled as manuka then it should have a grade of 10 plus or 300mg/kg of methylglyoxal.
"When we tried to push for it we were told by some of the big players that they weren't prepared to accept that as it wasn't commercially viable."
Federated Farmers Bee Industry Group chairperson John Hartnell said while honey for the domestic market was often blended for taste reasons, he did not believe people in the industry were blending honey in order to extend volume or mislead consumers.
"I don't think we've got people out there fraudulently doing things to cheat anyone. I don't think that's the case."
While interim labelling guidelines were now in place, the industry was working with the Ministry for Primary Industries on a two-year programme to define the criteria for monofloral manuka.
It was likely the methylglyoxal grading system would be a part of any final labelling guidelines, as the compound was easily found and identified, he said.
It was crucial the guidelines were tightened up, Mr Hartnell said.
"At the end of the day it's our reputation on the line - it's brand New Zealand ... it's essential that we do have a system that withstands scrutiny."