A new contamination scare hit New Zealand's multi-billion dollar dairy industry on Monday after it was revealed a milk product with excessive nitrate levels had been exported to China.

Both New Zealand's Ministry of Primary Industries (MPI) and the company at the centre of the latest scare, Westland Milk, insisted the product called lactoferrin did not pose a safety risk.

But the timing could not be worse for the country's dairy industry -- which generates a quarter of New Zealand's exports -- as it struggles to recover from a botulism contamination crisis earlier this month.

Westland said two batches of lactoferrin totalling 390kg (860 pounds) were exported to China despite showing nitrate levels of 610 and 2,198 parts per million -- well above the New Zealand standard of 150 parts per million.

Chief executive Rod Quin said it appeared the contamination was an isolated incident caused when cleaning products were not properly flushed from a South Island processing plant before a new run of product was sent through.

"We immediately initiated a process to find and quarantine all of the product and it has been put on hold," he said.

The government said that by the time the product had been through the manufacturing process, nitrate levels would have been so diluted as to be harmless.

"MPI's technical experts have looked closely at this issue and believe any food safety risk to Chinese consumers is negligible because the quantities of lactoferrin used in consumer products was very small," MPI acting director-general Scott Gallacher said.

"The nitrate levels in those products would easily be within acceptable levels."

New Zealand's reputation for producing top-quality dairy products was damaged when Fonterra revealed earlier this month that some whey product used in baby formula was contaminated with a potentially deadly bug that can cause botulism.

The scare, blamed on a dirty pipe at a North Island processing plant, caused product recalls from Saudi Arabia to China.

New Zealand's dairy exports are worth more than NZ$12 billion ($9.7 billion) a year, according to government data, with China its largest market.