The Government hopes New Zealand's key trading partners will agree to accept milk with some residues of the agricultural compound DCD in it.
Last week, two fertiliser companies withdrew their nitrification inhibiting products from the market. Traces of the active compound dicyandiamide (DCD) was found in Fonterra's milk during random testing last September.
The nitrification inhibitor is contained in eco-n produced by Ravensdown and DCn produced by Agri-Nutrients. It helps prevent nitrogen leaching into waterways and reduces nitrous oxide gas emissions.
Primary Industries Minister David Carter says the Government is working closely with its trading partners to try to determine an acceptable residue level.
"It is certainly not a food safety issue, and we now have to work with the world to see whether they are prepared to accept a very minor level of residue of DCD in milk products. If that can be achieved, then we can get back to using the product on pasture.
"We are the only country in the world using this product on pasture and we've been using that technique as a means of reducing nitrogen leaching into the soils."
Two of New Zealand's key markets for milk exports, Taiwan and China, have announced they will begin testing Fonterra's milk products for DCD.
Fonterra confident of customers
Fonterra will be carrying out more testing to further ease concerns about traces the chemical found in milk.
However, the company is confident that its international customers will not take New Zealand milk products off their shelves.
Fonterra chief executive Theo Spierings said anxiety is already dying down as customers realise their milk is safe, but more testing will be done.
"Around that period of September we are going to test more samples to make absolutely sure that the customers are informed of what levels we found."
Mr Spierings says Fonterra has science to show that the minute traces of DCD found in its products posed absolutely no food safety threat.
Because of this, he says, there was no need to notify Fonterra's customers of the discovery at the time.
A New Zealand investment banker based in China, David Mahon, says consumer reaction in China has so far been moderate. However, he says Fonterra needs to be translating its safety assurances into Chinese languages, so its messages get picked up there.
Bank of New Zealand economist Doug Steel said on Monday it does not look like there has been any reaction from foreign markets so far, as there has been no noticeable change in the New Zealand currency or the Fonterra Fund trading on the share market.
New Zealand 'upfront'
Primary Industries Minister David Carter said New Zealand has always been upfront and open about the contents of its dairy products and neither industry nor the Government made any attempt to hide the facts about traces of DCD.
"We talked with the fertiliser companies; the two companies voluntarily said 'we want to pull the product off the market', and that's where we've got to today."
Ministry for Primary Industries deputy director general of standards Carol Barnao says the ministry will provide its counterparts in Taiwan and China the most up to date risk assessments and reassure them there are no food safety concerns.