WELLINGTON (Reuters) - New Zealand police said on Tuesday (Oct 13) they had arrested a 60-year-old businessman suspected of threatening to contaminate infant formula in New Zealand, the world's largest dairy exporter, and charged the man with two counts of criminal blackmail.

The man was charged in an Auckland court after an 11-month investigation, police told reporters.

Police said they believe the accused man acted alone but they would continue to investigate the threat.

Police and New Zealand's agricultural industry have stressed that the country's dairy products and infant formula are safe.

Letters sent to the national farmers' group and dairy giant Fonterra last November, accompanied by packages of infant formula laced with the pesticide 1080, demanded that the use of the toxic pesticide be stopped by the end of March.

"We've done everything to ensure that the public weren't in danger throughout our investigation. There was a huge testing, regime," said Mr Mike Bush, New Zealand police commissioner. The testing of formula would continue as part of manufacturers' food safety measures, he added.

China is the biggest buyer of New Zealand dairy products, and the head of a New Zealand exporters' group said in March there had been a fall in Chinese demand after the threat to infant formula, which is prized among China's middle class.

In 2013, New Zealand's dairy industry was hit by a contamination scare when a botulism-causing bacteria was thought to be found in one of Fonterra's products. The scare prompted a recall of infant formula in China, but the discovery was later found to be false.

Dairy products make up more than 7 per cent of New Zealand's gross domestic product and farmers have been struggling financially with this year's plummet in global dairy prices.

The news of the arrest appeared to have unsettled the kiwi dollar, which dipped to a session low of US$0.6694, having been as high as US$0.6720 earlier on Tuesday.