Tainted milk leaves bitter taste in China

Buildings Brics: When it comes to anxiety over the "made in China" label, probably the milk industry has had it worst.

A dairy farmer collects milk from cows on the outskirts of Shanghai. EPA /QILAI SHEN
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There have been consumer scares with a host of products originating in China, from children's toys coated with paint containing too much lead to tea contaminated with heavy metals.

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Yet when it comes to anxiety over the "made in China" label, the milk industry has probably had it worst. A 2008 scandal in which the industrial agent melamine was added to milk to increase the apparent protein content knocked confidence so badly that even now many Chinese consumers buy only imported milk powder, despite the higher cost. Last year, 406,000 tonnes of milk powder was imported.

It is no wonder the scandal still reverberates, given that half a dozen babies died from kidney complaints and hundreds of others among the 300,000 who fell ill were hospitalised when a substance more commonly used to make plastic plates was found in milk and milk powder.

The Chinese authorities took the issue seriously, executing two individuals for their part, but concerns remain about a system, often blighted by corruption, that allowed such adulteration to take place.

Experts say China's food industry and the quantity of processed foodstuffs produced has grown much faster than the authorities' ability to carry out adequate testing and checks.

Even last year, there were reports of the authorities detecting tonnes of milk products contaminated with melamine, although the consignments may have dated from the original 2008 contamination.

"This is an example of how the milk is not controlled in China," says Ezra Shoshani, a dairy industry consultant who has helped to set up a large dairy farm near Beijing. "If there were laboratories, government laboratories that were checking the milk, I am sure the melamine scandal would have been prevented."

Concerns go beyond melamine, with antibiotics contamination also highlighted. This is perhaps no surprise, given that, according to Mr Shoshani, "there is no clear protocol" on how to use antibiotics and for how long milk from treated cows should be kept out of the food supply. As with melamine, Mr Shoshani says it comes down to there being too few government laboratories to test milk.

"This is a big issue in China and it's not solved," he says.

Estimates vary, but there are thought to be between 12 million and 16 million dairy cows in China, and the industry is growing.

According to Alastair Pearson, a veterinary surgeon and the technical director of World Wide Sires, a cattle genetics consultancy, eight years ago, 90 per cent of milk in China came from herds of fewer than 10 cows. Now it is just 40 per cent. This is partly because after the melamine scandal, many small-scale milk collection centres were closed to encourage consolidation.

"It's thriving," Mr Pearson says. "A lot of people are advancing very quickly. There's been a quantum leap in the progress from small herds where animals were not looked after to these large farms where animal welfare is light years ahead."

So while China's dairy industry as a whole has yet to reach what are often called international standards, there has been progress in farming practices, quality control and other key issues. At the large farms with which he has worked, Mr Pearson insists "milk quality is taken seriously".

"The higher end of the industry is regulating itself," he says. "There's some wonderful milk being produced; clean milk free of contamination. It's not doom and gloom. In the last four or five years, things have come up quite a lot in terms of milk quality produced by these companies."

He says testing regimes have improved and so melamine-type scenarios in which contaminants are deliberately added to milk products are now rare.

Yet concerns linger over poor levels of veterinary training, lack of knowledge of animal feed, inbreeding among Chinese cattle and a lack of clear standards for bacterial control.

In such an environment, specialists say, opportunities for overseas investors that set up high-quality farms are considerable. By introducing best practices from overseas, Mr Shoshani has seen annual milk yields on the farm he has been involved with reach 11,600kg per animal, more than double the average for China.

"It's totally open for foreign firms, for foreign owners," Mr Pearson says. "For those who can succeed, and there are hurdles, if they can overcome those challenges and have a degree of operational success, it's profitable." So as a business case, entering the industry makes sense, even if public confidence remains fragile and quality standards are inconsistent.

"It's still a good time to invest in dairy. I think the market is growing. It's huge," says Karen McBride, the vice president for sales and marketing at Wonder Milk, a brand produced at a US-owned farm east of Beijing operating with 7,000 cows.

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