NOVEMBER 3, 2008

Tainting of Milk Is Open Secret in China

By GORDON FAIRCLOUGH

Source of Article: http://online.wsj.com/article/SB122567367498791713.html?mod=googlenews_wsj

ZHANGZHUANG, China -- Before melamine-laced milk killed and sickened Chinese babies and led to recalls around the world, the routine spiking of milk with illicit substances was an open secret in China's dairy regions, according to the accounts of farmers and others with knowledge of the industry.

Farmers here in Hebei province say in interviews that "protein powder" of often-uncertain origin has been employed for years as a cheap way to help the milk of undernourished cows fool dairy companies' quality checks. When the big companies caught on, some additive makers switched to toxic melamine -- which mimics protein in lab tests and can cause severe kidney damage -- to evade detection.

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Spiking the Milk Supply

The routine spiking of milk with illicit substances was an open secret in China's dairy regions, according to farmers and people with knowledge of the industry.

Worries about the extent of contamination in China's food supply took on new urgency this weekend. After melamine was discovered in eggs in Hong Kong and mainland China, Beijing called for a nationwide crackdown to stop the contamination of animal feed, which authorities believe is the source of the melamine in eggs. The Agriculture Ministry said it has found melamine in 2.4% of the feed it has checked since mid-September, and has destroyed or confiscated more than 3,600 tons. The ministry called on local officials to "resolutely crush the dark dens" making and selling melamine for feed, saying it had found 238 and was investigating 278 more.

Melamine in feed hasn't led to the same kind of high concentrations of the chemical in eggs that were found when it was directly poured into milk -- thousands of parts per million in some cases. But amounts found in eggs have been above the safety standard China and several other countries established of 2.5 parts per million.

Egg sales are down, as is demand for chicken, and some farmers have begun slaughtering chickens they can no longer use. State media criticized food companies and government consumer-protection watchdogs for the lapses, as Beijing's response showed its alarm about a broadening threat to public confidence in food safety. Meanwhile, local officials in some areas were inspecting meat and considering widening the checks to farm-raised fish.

Manufacturers of melamine, an industrial chemical used in plastics, say they have noticed demand for their factory's scrap rising. In the small Hebei farming village of Zhangzhuang, residents say, melamine bought as scrap from a nearby factory often was stored on the pavement outside the village school before it was turned into a milk additive. "They kept it in big piles," says one village elder. Business in the powder became so brisk that villagers involved worked long hours and through holidays to meet demand, residents say.

China's biggest local seller of liquid milk, Mengniu Dairy Co., and multinational food company Nestlé SA both say they were aware that Chinese farmers and traders added unauthorized substances to raw milk, but that they didn't know melamine was among them. "We knew there was adulteration" going on for many years, says Zhao Yuanhua, Mengniu's spokeswoman. Among other common milk additives: a viscous yellow liquid containing fat and a combination of preservatives and antibiotics, known as "fresh-keeping liquid."

More than 2,300 Chinese children remain hospitalized for melamine-related kidney problems, almost two months after the adulteration was publicly disclosed. At least three children died and tens of thousands of others were sickened. The national scandal has badly shaken Chinese consumers' faith in the safety of their food and reawakened fears abroad about the standards of Chinese products. Some brands of foods made with Chinese milk, such as candy, have been recalled as a precaution as far away as the U.S.

Melamine's chemical properties boost the apparent presence of protein in food. Actual protein powders -- which farmers are also prohibited from adding to raw milk -- use protein from ground animal parts, soy and other sources. Additive makers sometimes mix melamine with food additives such as the starch derivative maltodextrin, and repackage it for sale to dairy farmers without disclosing the ingredients.

Similarly, melamine has been mixed into animal feed by producers who want to make the feed seem as though it is higher in protein than it actually is. Yang Yong, part owner of a feed mill in Henan province says the practice is "very common" and hard to detect. He tries to choose trustworthy suppliers because "our testing can't pick it up," he says. "I can't guarantee there's no melamine in our feed."

Two dairy farmers from Hebei province, who described the milk-adulteration process but asked that that their names not be used, said additives have long helped farmers fool dairy-company tests for protein, fat content and freshness. Some farmers also add hydrogen peroxide, an antimicrobial, they said.

One of them, who has raised dairy cows for 20 years and is a farm-association leader, says salespeople for years would go from farm to farm in dairy-cow areas hawking "protein powder" for use as an additive. It would often be delivered in unmarked brown paper bags weighing 25 kilograms, or about 55 pounds, and costing 300 yuan to 400 yuan, or $44 to $60, he says.

About two years ago, farmers and Chinese authorities say, some manufacturers offered a new version of protein powder that they said could still fool dairies that had caught on to other protein additives. It contained melamine, but wasn't labeled as such. "Everyone just called it protein powder," says the second farmer. "Nowhere did it say it was melamine, " he says. "People never thought about it and never thought they needed to know more details."

Liu Wuqiang, another dairy farmer in Hebei, says, "farmers had no idea it was poisonous." He says, "We were just afraid that our milk would be returned and wasted." He says he never added anything to his milk.

Guan Huizhen, the sales manager at Hebei Guangtong Chemical Factory in a city near Zhangzhuang, says people have increasingly come looking for the factory's melamine scrap in recent years. "I never care why my customers buy it," Mr. Guan says.

Dozens of companies producing "protein powder" still advertise online, but many of the links have been shut down since the melamine scandal became public in early September.

One man who bought milk from farmers in northern Shaanxi province and sold it to dairy companies, Jiang Weisuo, went public last year with his fears about unauthorized substances, including antibiotics, being added to competitors' milk. He says he complained to regulators and dairy makers in 2005 and 2006. "They all said they would look into it, but there was never any result," he says. He then complained to state-run China Central Television, and his complaints spurred a report complete with footage of workers dumping additives into barrels of milk. Officials at the Shaanxi Quality and Technical Supervision Bureau confirmed Mr. Jiang's initial complaint, but an investigator said he failed to find evidence of wrongdoing.

Mengniu Dairy has essentially engaged in a cat-and-mouse game with suppliers, says Ms. Zhao, the spokeswoman. The firm has varied its tests to try to catch substances being used by farmers. "If we found that levels of dry matter in the milk suddenly rose, we would have to figure out whether some things had been added in," Ms. Zhao says. The company now checks for melamine as well as residues of pesticides, veterinary drugs and antibiotics.

To Nestlé, which uses Chinese milk in products sold almost entirely in China, the unauthorized addition of protein, fat, preservatives and antibiotics to milk "are well-known" problems in China and other developing countries, says Robin Tickle, a Nestlé spokesman. He says the company buys milk directly from producers who receive instructions from Nestlé.

The company uses more than 70 tests to assure the safety of Nestle milk. "We are on the permanent lookout for adulterants," Mr. Tickle says. Yet regulators in Hong Kong and Taiwan found very low levels of melamine in some Nestlé milk products in September, just after Nestlé itself started testing for melamine. Nestlé recalled the products, though the company said that the trace amounts posed no health risk.

Given the intense official attention now directed at milk supplies, people in the industry say they expect that melamine adulteration of milk has largely stopped. But they say the underlying problems for the food supply remain: flaws in farming methods and relatively lax supervision.

China's legions of small-scale dairy farmers are hard to police, and relatively few have the capital and know-how to adhere to good dairy-farming practices, says Qiao Fulong, a Beijing-based dairy consultant whose company, Beijing Farmunity Inc. offers technical advice to farmers. Adulteration has become "a common remedy," he says.

Complicating the challenge for milk is the relative newness of dairy cows to China as demand has surged in recent years. Mr. Qiao says that because many farmers don't know how to feed and care for dairy cows properly, the milk they produce often fails to meet the dairy companies' standards. Even farmers who do know what to feed the cows often choose cheaper feed options, Mr. Qiao says. Many feed the cows maize straw instead of corn stored in a silo, because it is cheaper -- but less likely to lead to good milk production.

—Kersten Zhang in Beijing and Ellen Zhu and Bai Lin in Shanghai contributed to this article.

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