China has halted imports of all New Zealand milk powder, New Zealand's trade minister said on Sunday, after bacteria that can cause botulism found in some dairy products raised food safety concerns that threatened its $9.4 billion annual dairy trade.

Global dairy trade giant Fonterra said on Saturday it had sold contaminated New Zealand-made whey protein concentrate to eight customers in Australia, China, Malaysia, Vietnam, Thailand and Saudi Arabia for use in a range of products, including infant milk powder.

Nearly 90 per cent of China's $1.9 billion in milk powder imports last year originated in New Zealand, so a prolonged ban could result in a shortage of dairy products in China.

Foreign-branded infant formula in particular is a prized commodity in China given consumer distrust of Chinese brands after a series of domestic food safety scandals.

New Zealand's neighbour Australia was caught up in the ban after some of the contaminated whey protein concentrate was exported there before being sent on to China and elsewhere.

"The authorities in China, in my opinion absolutely appropriately, have stopped all imports of New Zealand milk powders from Australia and New Zealand," New Zealand Trade Minister Tim Groser told Television New Zealand on Sunday.

"It's better to do blanket protection for your people and then wind it back when we, our authorities, are in a position to give them the confidence and advice that they need before doing that," he said.

There was no official word of a ban from Chinese authorities early on Sunday.

On Saturday, Chinese state radio said Fonterra was notifying three Chinese firms affected by the contamination. Some of China's biggest food and beverage companies are said to be customers of Fonterra, using its milk powder as an ingredient in everything from confectionery to cheese on frozen pizza.

Fonterra is a major supplier of bulk milk powder products used in formula in China but it had stayed out of branding after Chinese dairy company Sanlu, in which it had held a large stake, was found to have added melamine - often used in plastics - to bulk up formulas in 2008. More than six children died in the industry-wide scandal and hundreds were made sick.

BANS, RECALLS

Other countries also were reportedly halting imports and ordering recalls of New Zealand-made dairy products.

Russia has suspended imports and circulation of Fonterra products, Russia's ITAR-TASS news agency said on Saturday, quoting consumer watchdog Rospotrebnadzor.

Media reports late on Saturday said Thailand had ordered a recall of Fonterra products imported since May.

New Zealand's Ministry of Primary Industries said five batches of follow-on baby formula marketed by Karicare, a popular brand in China, had been contaminated by the bacteria, although none had entered the retail supply chain.

Those products sitting in storage facilities would be held back from the market, it said.

Farmer-owned Fonterra is a big supplier of wholesale dairy ingredients to multinational food and beverage companies. It also markets its own consumer brands, including Anchor milk in New Zealand and Anlene and Anmum maternal milk formula, which is available in Southeast Asia and other regions.

It said all of its own brands were free of contamination and that there had been no reports of any illness linked to the affected whey protein. It added that Fonterra CEO Theo Spierings was travelling to China to discuss the issue.

The incident is the second this year involving New Zealand's largest company. In January, Fonterra said it had found traces of dicyandiamde, a potentially toxic chemical used in fertiliser, in some of its products.

The bacteria behind the latest scare, Clostridium Botulinum, is often found in soil. The Fonterra case was caused by a dirty pipe at a processing plant.

It can cause botulism, a potentially fatal disease that affects the muscles and can cause respiratory problems. Infant botulism can attack the intestinal system.

The contamination issue comes as China has started to tighten dairy import regulations to improve overall food safety. In recent weeks, Beijing has introduced regulations restricting the operations of smaller infant formula brands.

New Zealand's dairy industry is a big driver of the country's agriculture-based economy, with its NZ$12 billion ($9.4 billion) in exports last year accounting for around 25 per cent of total merchandise exports. - Reuters