Prime Minister John Key has welcomed the sharp fall in the New Zealand dollar in recent weeks, but says it remains over-valued.
Key said he did not think the Reserve Bank's minimal intervention to sell the New Zealand dollar in April was a factor in the New Zealand dollar's fall from 86 USc in early April to 78.3 USc in late Monday trade.
He pointed to a fall in the Australian dollar and stronger economic data in the United States was a factor in US dollar strength and New Zealand dollar weakness.
"It would still be over-valued," he said.
Elsewhere, Key said the Ministry of Primary Industries was looking into concerns raised by Fonterra and others on Friday that regulations governing exports of baby formula were not tough enough to secure the reputation of such exports to China.
Key said he was aware of the potential concerns. "It's really important that if anybody who sets up a manufacturing plant for baby formula or any other dairy product they meet the highest standards here in New Zealand. The risk is somebody comes to New Zealand, sets up a plant, takes some shortcuts and all of a sudden anything produced in New Zealand is tainted by that bad process. The Ministry of Primary Industries has been looking at that issue," he told a post cabinet news conference.
The Infant Nutrition Council (INC), a lobby group backed by Fonterra, Nestle and Nutricia, warned New Zealand's export brand was being put at risk by inexperienced companies trying to cash in on booming demand in China for New Zealand-made or sourced infant formula. Reports on China state-run CCTV in recent weeks have raised questions about the truthfulness of the claims of some of the more than 200 brands of formula that promise to be from New Zealand.
“Recent media reports have highlighted that companies that lack basic supply chain integrity are threatening New Zealand’s reputation as a producer of the highest quality infant formula, and the industry and government agencies must work together to guard that reputation,” Infant Nutrition Council CEO Jan Carey said in a statement on Friday.
The Infant Nutrition Council has set up a code of practice which Associate Minister of Health Jo Goodhew said recently the government recognised “as an industry standard and expects all infant formula manufacturers and marketers in New Zealand to meet this standard”.
“The New Zealand industry needs a united approach and any company that seeks to market infant formula brands should be required to comply with agreed industry standards such as the INC codes,” Carey said.
“Whether infant formula is marketed in New Zealand or overseas, we must do everything to ensure short-term opportunism by some individuals or companies does not damage the trust among international consumers that New Zealand produces safe, healthy and sustainably produced food,” she said.
(Updated with quotes, details, background)
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