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Friday, Jun 29, 2012 9:45 AM UTC

No quick-fix for China’s troubled dairy industry

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Topics: From the Wires,

BEIJING (AP) — China learned hard lessons from a contaminated milk scandal that left six babies dead four years ago but its dairy industry is still plagued by quality lapses, from toxic mold in milk to mercury in baby formula.

Experts say the new scandals have a silver lining: they show the industry’s new transparency. But the persistent problems also underscore that milk is a new addition to the Chinese diet and it will be a long time before it’s truly safe.

The latest company to run into a problem is Bright Dairy and Food Co, which this week announced that one of its factories had accidentally flushed alkaline water, used for cleaning, into cartons of milk. The recall of some 300 cartons didn’t happen until consumers complained about foul smelling milk.

The problems have sent people over the border into Hong Kong to buy milk powder for their babies, and have been reported in the usually tightly controlled state media. One columnist, Wang Xiaoshan of the Beijing News, has lobbied online for dairy boycotts. He regularly vents to his nearly 1 million micro blog followers about Mengniu Dairy Group, an industry leader who was among those found to have the industrial chemical melamine in their products in 2008.

“The safety problems have never stopped happening,” said Wang. “I only drink water.”

After six babies died from melamine-laced formula in 2008, Chinese Premier Wen Jiabao vowed the leadership would prevent anything like it happening again but despite such pledges, dairy scandals keep emerging.

In December, Mengniu announced it had destroyed a batch of milk found tainted with cancer-causing mold aflatoxin but admitted some had already reached consumers. An investigation linked the tainted milk to dirty cow feed. Though at low doses it is not considered harmful to humans, high doses are linked to cancer, especially in the liver.

Earlier this month, Yili Industrial Group said it had recalled infant formula because it was tainted with “unusual” levels of mercury.

Once a rarity in the Chinese diet, dairy has become a staple as incomes have risen, and though demand has skyrocketed, supply has lagged. Chinese herds are small, feed is substandard and yields are low.

David Mahon, managing director of Mahon China Investment Management, a Beijing research and investment advisory firm, said China officially has about 16 million cattle though the real number is probably closer to 12 million. A large percentage of those cows are part of small backyard herds milked by hand by a single farmer, he said.

Mahon said chronic shortages led to the practice of watering down milk that spawned the melamine scandal, and that shortages today still lead to corner cutting and quality problems. Farmers are too reluctant to dump milk, even if it has problems.

“What we see in China is particular to a country that has a medieval farming system serving a product to a 21st century market,” said Mahon.

More Alexa Olesen.

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