The Ministry for Primary Industries said a stop was put on exports from 61 of the 81 NZ plants licensed to export to Russia after Fonterra’s botulism scare last August.
The ban imposed by Russia remains in place despite the scare being a false alarm.
Russian officials were scheduled to inspect the plants early this year as a first step to restoring trade but the visit never went ahead.
Soon after NZ pulled out of trade talks with Russia and its customs union partners Belarus and Kazakhstan, after fighters backed by Russia marched into Crimea and the West began to sever links.
The Government has since advised exporters not to increase sales to Russia despite that country imposing a one-year ban on food imports from the United States, the European Union, Australia, and several other Western countries.
That’s despite officials in Moscow saying NZ could help fill gaps created by the ban.
Trade Minister Tim Groser is wary of tarnishing NZ’s reputation and specifically its prospects for trade deals with the EU and the US through the Trans-Pacific Partnership talks.
Asked about the processing plant listing issue, Groser said NZ was treading carefully.
“We are not seeing this primarily through a trade or commercial lens but through a political lens.
“The resolution of this issue rests on a resolution of something far larger than NZ’s got a stake in and that is the security situation in eastern Ukraine.”
In the meantime Russian officials are scouring the globe for alternative food sources. They have signed a number of new dairy suppliers.
In recent weeks new export licenses for Russia have been granted to dairy factories in Brazil, Chile, and Turkey.
Earlier this month factories in Chile owned by multinationals Danone and Nestle were given the all-clear to export to Russia.
Three plants have been licensed in Brazil, where dairy products had not featured previously among its exports to Russia.
As recently as the late 1990s Russia had been NZ’s largest market for butter.
In the 1997-98 season the Dairy Board exported more than 100,000 tonnes of dairy fats alone to Russia.
That compares to less than 20,000t of dairy products of all types it bought from NZ in the past 12 months.
A senior dairy company source said the industry in this country wanted the trade to return to its previous levels.
At the same time it was mindful of the damage that could do to efforts to scrap tariffs and quota restrictions in even larger markets in the EU and the US through free-trade deals in the pipeline.
“Having Russians turning up here en masse to work this through right now would not be perceived very helpfully by others.”
The source said the industry was in a difficult situation, where it did not want to encourage Russia to restrict trade further with NZ by banning imports outright, as it had with other Western countries, but equally did not want to be seen by the US and the EU to be exploiting opportunities in the Russian market created by the ban.
Dairy Companies Association chairman Malcolm Bailey believed the industry was uniform in its support of the Government’s stance on dairy export licenses and in its plea for companies not to exploit increased demand that might arise from Russia’s food import ban while the situation in Ukraine remained unresolved.
