By Calum MacLeod, USA
Source of Article: http://www.usatoday.com/money/industries/food/2008-10-07-chinamilk_N.htm
— When Charles Shao started spending millions of
dollars in 2004 to build a Chinese dairy farm that meets international
quality standards, "everyone thought we were fools," he says.
"Now they say, you were right to take such care. Send me your
milk!" says Shao, an American and CEO of Huaxia Dairy Farm, an hour's drive from Beijing.
For the past month, China's government and dairy industry have
struggled to contain the spread of tainted milk products, from Australia to South
America. The government vowed this week to overhaul China's
"chaotic" dairy industry. Premier Wen Jiabao apologized to the victims and promised
But similar crises will
happen again, predict Shao and other experts in China's
massive food-processing business.
deputy director of the government's National Institute of Nutrition and
Food Safety, says, "For now, farmers won't dare to put additives into
milk. But after some time, if the government effort slackens, some farmers
will feel the pressure of rising costs and falling profits. The chances of
making fake products increase. There will be more food-safety problems
The current scandal,
which involves more than one-third of China's producers of milk
powder, erupted last month when four babies died and more than 54,000 became ill after drinking formula tainted with
melamine, an industrial chemical that fools tests to show a higher protein
content. Melamine can produce kidney stones and other ailments. The
chemical also was discovered in pet food last year that sickened hundreds
of American pets.
"We have not
learned enough lessons from the melamine problems last year," says Luo Yunbo, a food scientist
at the Chinese
Agricultural University. "We need to toughen
the inspection system and standards, and also raise the moral standards of
That's a tall order,
says Laurence Brahm, a political economist and
resident of China
for 25 years. China
"has gone from socialism to extremist capitalism, in which money is
absolutely supreme and there is no other value. Everybody takes shortcuts
to squeeze costs, and the (consumer) is the one who ultimately
He points to recent
food-safety scandals. In 2004, fake Chinese-made baby formula that
contained minimal nutrition caused at least 12 deaths and malnutrition for
hundreds of infants. Other incidents in the past three years include cooked
duck eggs colored with industrial red dye, vegetables with harmful
pesticide residue, fish with dangerous pharmaceuticals, and vegetables and
fruit injected with hormones.
"Each time, there
is a knee-jerk reaction, but this is a fundamental, systemic problem where
there is no transparency, and the bureaucracy is so entangled that it
breeds corruption," Brahm says.
Beijing resident Ren Suqin doesn't know which products to trust in her local
"I am worried
about other foodstuffs now: What ingredients do they have that they
shouldn't?" says Ren, who was taking a
sample of baby formula to the Chinese Academy of Inspection
and Quarantine for testing. The testing center is one of 388 labs used by
the government and companies that opened this week to individuals for the
Ren's 1-year old nephew was raised on Yili baby formula, an Olympics sponsor, some of whose
products tested positive for melamine.
"We consumers are
very angry. We used to trust this brand. I have phoned Yili
many times, and also the government quality ministry, but I don't believe
what they say," says Ren, who paid $150 for
the test that will take a week.
Public anger runs deep
in the city of Shijiazhuang, home to dairy giant Sanlu,
a government—controlled company and China's largest producer of milk
powder. Sanlu is at the heart of the milk
"I am a doctor and
I save lives, but these criminals must be executed," says Qi Li, 55, whose 3-year-old granddaughter, Hou Zhuoxiang, developed
kidney stones after drinking Sanlu's formula.
Qi is also angry that Sanlu
was exempt from inspections under a policy to promote self-regulation of
local industries. That policy was canceled last month.
The government has
arrested 32 people in connection with the milk scandal and continues to
restrict news reports.
In the village of Dongsu in Hebei province, home to Geng Jinping, one of the
first people to be arrested for allegedly tampering with bulk milk, a USA TODAY
reporter recently was prevented by 10 local officials to interview
"We are actively
trying to find other companies to buy local farmers' milk," said one
official, Liu Xinping.
At the Huaxia Dairy outside Beijing,
CEO Shao hopes the crisis leads to stricter
standards in China's
In September, he
shipped in 2,800 cows from Australia,
as the company seeks to become China's largest raw milk
provider and the first to be certified by the U.S. Food and Drug
Administration. He has invested $22 million and says it will earn a 25% net
profit this year.
The government's pledge
to beef up supervision "won't change anything, because milk companies
are not in control of the whole production process," Shao says. "There are big food-safety problems in China.
There are a lot of laws that are not enforceable … but those issues are why
we are here."