Trade Minister Tim Groser says international rivals may be taking advantage of Fonterra's botulism scare to limit New Zealand dairy imports into Sri Lanka.
The Sri Lankan government last week ordered Fonterra to recall two batches of Anchor milk powder, alleging tests showed they contained traces of dicyandiamide (DCD).
The New Zealand Government says independent analysis shows Sri Lanka's tests are wrong. Prime Minister John Key says their results were off the charts and bore no resemblance to anything the Government has seen before.
Mr Groser said it is impossible for DCD to have been found because dairy farmers in New Zealand stopped using it in late 2012.
He said certain dairy companies have campaigned for years against New Zealand products going to Sri Lanka and some could be trying to take advantage of the unrelated, botulism scare.
John Key says he is confident that New Zealand's tests are correct and the milk is safe.
Meanwhile, Primary Industries Minister Nathan Guy says the Foreign Affairs and Trade Ministers, as well as the High Commissioner are working with the Sri Lankan government to find out why its testing regime does not line up with New Zealand's.
Mr Guy hopes the issue can be resolved quickly because Sri Lanka is an important market. He says disquiet first arose in May this year after the Sri Lankan Agriculture Minister was quoted saying New Zealand dairy products were toxic.