It's all because foreign produce is making its way to factories in New Zealand where it is processed, re-packaged and exported carrying the 'Made in New Zealand' label.

The fruit, vegetables, meat and fish is then given a green light into Australia as part of the New Zealand-Australia free trade agreement.

Chinese products are the main offenders and they're awarded free passage into New Zealand courtesy of a free trade agreement between the two countries.

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It's an agreement Australia doesn't adhere to - Chinese goods must pass rigorous checks by Australian customs.

Tests have revealed many Chinese products contain dangerous pesticides, banned cancer causing chemicals, lead and bacteria from Chinese farmers using human and animal faeces as fertilisers.

Recent random testing of foreign produce in New Zealand uncovered shocking results. New Zealand Greens MP Sue Kegdely says Australians should be worried.

"Vietnamese catfish contained a substance, gentian violet, which has been linked with cancer. I think they [the tests] raise questions about the safety of imported produce," Sue said.

"If we can find one little bit of testing that 40 per cent of the plums are contaminated with lead, what does that mean about the rest of the produce?"

"The testing at the border is woefully inadequate because we test such a tiny amount of produce coming into NZ."

Late last year cornflour sent from China and "processed" in New Zealand had to be recalled. Twenty-two tonnes of the cornflour made its way to Australia in New Zealand packaging.

Ausbuy Chief Executive Lynne Wilkerson says the problem is made worse by misleading labelling laws.

"We're not told where ingredients are imported from, or more importantly, what percentage of imported goods are in a product," Lynne said.

"If you're buying cheap vegetables from overseas, 51 per cent of the wholesale cost of goods is the 'made' component - nothing has to come from this country to be called made in Australia or made in New Zealand."

"We believe that a lot of food made in New Zealand, coming out of New Zealand, is actually from China."

"China has more than doubled the amount of food they are sending into Australia, but that doesn't include food they are sending which is processed in New Zealand and then gets sent here."

"At the end of the day, we are exporting good quality, clean, green food and we are importing inferior quality to feed to our people."

Forty-five per cent of frozen vegetable imports into Australia come from New Zealand, 16 per cent come from China and 12 per cent come from Canada.

Overall, frozen vegetable imports have shot up by more than 15 per cent in the last year.

Further, many Australian producers can no longer compete and are forced to look on as imports are dressed up like local made-and-owned brands.

McCains is the latest company to close a food processing factory in Australia and move its Tasmanian base across to New Zealand.