Economic Development Minister Steven Joyce says there is no guarantee that it was dirty pipes that caused the contamination in Fonterra dairy products.
Three batches of whey protein concentrate totalling 38 tonnes and used in infant formula have been found to be contaminated with the bacterium that can cause botulism.
It was produced at a Fonterra processing plant in Waikato in May 2012 but this was only made known at the weekend, prompting product recalls and import bans in some countries.
Food Safety Minister Nikki Kaye, left, Trade Minister Tim Groser and Prime Minister John Key at Parliament. Photo: RNZ
In New Zealand, infant formula company Nutricia on Monday night changed its recall from a voluntary recall of limited batches of two Karicare products to a full voluntary recall.
The company said all batches of Karicare Stage 1 New Baby Infant Formula and Karicare Gold+ Stage 2 Follow On Formula are being recalled. However, it said none of the products tested and sold in New Zealand indicate any contamination.
Prime Minister John Key said on Monday that MPI officials have been at the Fonterra plant in Hautapu where the contamination occurred and also at Nutricia's offices helping to track the tainted products.
Mr Joyce was sent back to Auckland to reiterate to the dairy giant that it must provide all of the information needed by regulators and consumers.
Fonterra had said dirty pipes at the factory were the source of the contamination, but Mr Joyce said he is not so certain.
The minister said a full inquiry is needed before it can be known exactly how bacteria contaminated the products, but that would not happen until it is known which have been tainted and how much.
Mr Joyce said a change in information systems at a Fonterra plant in Australia, which produces the affected Nutricia baby formula, has made it difficult to know how much contaminated whey went into it.
Staff from MPI are being sent into Fonterra offices in Auckland, Hamilton and Australia to determine how much product has been affected.
The Prime Minister said the situation is extremely serious and the New Zealand Government is deeply concerned about it.
More countries consider ban
Trade Minister Tim Groser said on Monday that China's ban on Fonterra products applies only to whey protein concentrate and a product known as base infant powder formula. He said it did not apply to all of the company's products and its whole and skim milk powders are still going through.
However, Mr Groser said more countries including Sri Lanka, Malaysia and Vietnam have indicated they are considering a ban on some Fonterra-sourced products. Other countries that could be affected include Saudi Arabia, Thailand and Australia.
Russia did not import the concentrate, but has banned all Fonterra milk powder.
Mr Groser said the New Zealand economy would take a short-term hit from the contamination scare.
Fonterra's co-operative shares, which are owned only by dairy farmers, were down 4% or 29 cents to $6.85 on Monday. The New Zealand dollar fell sharply in the morning when markets opened, but has recovered slightly and by 5pm was trading at about US77.65 cents.