A cargo ship is floating off New Zealand's coast, barred from entering our ports for weeks amid fears it is carrying contaminated palm kernel that could endanger the agricultural industry.

The 23,000 tonne haul is on board cargo ship, the MV Molat, has been anchored several kilometres off Tauranga Port since September 6.

Palm kernel extract (PKE) is a common import to New Zealand, and is used in animal feed on farms.

But this shipment was blocked from entering by the Ministry of Primary industries after it was discovered the palm kernel was sourced from an unregistered facility in Malaysia. MPI is currently in negotiations with the supplier.

The Molat left Port Klang​ in Malaysia on August 15 and the shipment, which has a current estimated spot price of about $250 a tonne, was worth about $5.75 million on the New Zealand market.

Greenpeace senior campaign advisor Grant Rosoman​ said the situation was showed there was a lack of knowledge around the supply chain for palm kernel (PKE). 

"It could come from anywhere. There's no guarantee where it's come from and it's likely it's got deforestation related to it."

The ship had been in North Sumatra on April 5 before making port in Malaysia. 

That could link the ship to "highly controversial" palm oil plantations in North Sumatra that were linked to orangutan habitat destruction.

"It's likely to have come from some sources that are linked to deforestation in Sumatra and we are asking all of the importers of PKE to commit to a no deforestation, no peat land and no exploitation of resources [policy]."

He applauded the MPI for stopping the shipment.

"The shipments carry a number of risks, one is biosecurity and another is deforestation and things like that so it's good all round to have had this [ship] stopped."

New Zealand is the largest user of PKE, importing about a quarter of the world's supply. Statistics NZ figures show imports peaked in the year to June 2015 at 1.94 million tonnes before falling to 1.86m/t in the year to June 2016.

PKE processing mills in Malaysia needed to be registered in order to assure that their product has met the required export standard for New Zealand, MPI border clearance services director Steve Gilbertsaid.

The MPI was in ongoing discussions with the importer and these had taken nearly a month because of the large quantity in question.

"The importer would obviously like to discharge the cargo, which is understandable, we are open to that and we are working with them around under what basis we can allow that cargo to be discharged."

He refused to disclose the importer's identity and PKE importers Fonterra and Swaps Stockfeed have denied the shipment belonged to them and Mount Maunganui-based feed importer ADM New Zealand could not be reached for comment.

"The main discussions at the moment - and to be fair, they have been very constructive between us and the importer - is around how our requirements could be met to prevent any biosecurity risk to New Zealand," Gilbert said.

While the ship remained at sea, it posed no biosecurity threat, he said.

"It is currently securely contained in the vessel. Unless the biosecurity risks can be managed, the shipment will not be permitted to land."

For the importer, they could either treat, destroy or re-ship the product.

"What is challenging in this situation is the volume and the size of the product."

He expected a final decision to be made of the shipment's fate shortly. Gilbert said they were close to resolving the issue with the importer and believed a decision will be made in the next few days.

"Realistically there is only two choices. The importer elects to take the product to another market, or the vessel is discharged under MPI supervision and treated to MPI's requirements."

If this occurred, the PKE would present no biosecurity risk to New Zealand.

The MPI amended its import rules in June 2013 requiring PKE only to be  imported from facilities approved and regularly audited in exporting countries. To date, the MPI said it had not had to stop any other PKE shipments for failing to meet this requirement.

Federated Farmers Bay of Plenty arable chairman Colin Mackinnon said the MPI had done the right thing by preventing the ship from coming into port.

He said it was "most heartening" to hear they were halting the shipment because of issues over where the PKE was sourced from. 

A long time critic of the MPI's efforts around biosecurity, he applauded them for stopping the shipment.

"All the arguments we have had with the MPI would fade away if they became more transparent, which is what they appear to be doing here."

- Sunday Star Times