Minister for Primary Industries Nathan Guy says New Zealand's dairy industry is sustainable - despite its increasing reliance on imported palm kernel expeller (PKE) as a supplementary feed.
New Zealand imported about 1.5 million tonnes of PKE last year, 15 times more than it imported 10 years ago.
PKE is the by-product from palm oil production and is largely sourced from Malaysia and Indonesia - where the industry's associated with deforestation, biodiversity loss and questionable biosecurity practices.
It's imported by about 15 companies.
Nathan Guy appeared before Parliament's Primary Production Select Committee on Thursday, where Green Party agricultural spokesperson Steffan Browning asked him why we keep bringing in palm kernel.
Mr Browning said PKE is not even a good product and it has shortcomings in terms of sustainability and a poor health profile in terms of trans-fats as a by-product within the milk.
"What is Government's vision about pushing back against using imported feed imports, the ones that bring risk to our reputation and biosecurity and helping New Zealand farmers?"
Mr Guy said that's why the Government is making changes to the import health standard and making changes to containment facilities to keep out birds and rodents.
He said New Zealand is primarily a pastoral based economy and palm kernel is a very important source of feed and if that had not been available during the drought this year there would have been animal welfare cases.
But Mr Browning said that is because New Zealand's farming system has been geared incorrectly.