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Scandal forces reforms in China's dairy industry

/ Source: The Associated Press

Peering into five pails of foaming milk, Wang Guifeng quickly jotted down the farmer’s name before signaling the batch was OK. Every day he rejects milk from two or three farms whose cows don’t meet hygiene standards or show signs of disease.

The inspections are part of a raft of new safety measures and increased supervision over the Chinese dairy industry in the wake of the country’s tainted milk crisis.

“They (government regulators) have tightened quality control and the farmers understand that. The farmers know they have to feed their cows well and not give them antibiotics or other things,” said the 31-year-old inspector. “Nowadays we’re a lot stricter.”

Milk laced with the industrial chemical melamine has been blamed for the deaths of four babies and for sickening 54,000 others with kidney stones and other illnesses. Some 10,700 children across the country remain hospitalized, according to the Health Ministry.

Alarmed by the growing public outcry and international recalls over its tainted dairy products, China’s government pledged this week to overhaul the troubled industry by monitoring every link in the supply chain that brings milk from farms to family kitchens.

Investigators have said milk suppliers, in a bid to increase profits, watered down the milk and then added the chemical to make it appear to meet protein standards. Melamine, like protein, is high in nitrogen, which is what quality tests measure.

The new government policies appear to be largely aimed at securing the bottom of the supply chain — the farms where raw milk is obtained. An estimated 80 percent of all milk comes from small farmers who sell it to milk collection stations, which in turn sell to dairy companies.

The reforms are already rippling through this major dairy-producing region in Inner Mongolia, home to China’s two largest dairy giants, Mengniu Dairy Group Co. and Yili Industrial Group Co., both of which have been implicated in the scandal. Together the companies control more than half of China’s dairy market.

The wide grasslands around Hohhot, the provincial capital, are home to hundreds of farmers, many of whom moved here in recent years to cash in on the booming dairy industry. Huge banners advertise the city’s desire “to construct the world’s milk capital and make an international brand.”

The latest food safety crisis has hit small farmers the hardest. For a decade, 39-year-old Song Fenmei and her family have lived comfortably off their income as farmers. They own eight cows, who sleep in the front yard of their small home.

But since the scandal broke last month, Song has been forced day after day to dump milk the dairy companies will not buy, while still paying for expensive feed for her animals. Farmers have seen no signs of the emergency subsidies promised by the government, she said.

“We can barely afford this. We have to buy good feed, or else the cows don’t give good milk. But if we don’t have good milk, we don’t have money to buy the feed,” she said, throwing up her hands. “Most of the dairy farmers here are in the same situation as we are. We tell each other, ’We’re finished.”’

Only this week did the dairy companies start buying her milk again, she said. But the new regulations have created an extra cost.

“They have been very strict. We have to clean the cows every day. We have to wipe their udders every time. Some of us don’t want to deal with this anymore. If things keep going badly, my family is planning to keep the two best cows and sell the rest,” she said.

The new rules are being enforced by 5,000 government inspectors who have been dispatched to provide 24-hour supervision over the industry.

His job is to monitor the process, focusing on hygiene and health standards. Farmers have been told to notify inspectors if their cows have been given antibiotics, but random testing is also done on milk samples to check, he said.

“I don’t care whether they’re having a hard time or not. I have to make sure the milk is good quality. Otherwise, the company fines this station,” he said. “There were cases when I detected antibiotics. In that case, we don’t accept the milk and they have to take it back.”

As painful as the new measures are, ultimately it will be good for the industry, said Cui Zhigang, who owns the 1,000-cattle Zhaojun Farm outside the capital.

“This will affect the industry because it involves a lot of people, but this could also be a new beginning. We need to have larger farms and run them in a more standardized way — that’s the trend for the future,” he said.

“A few bad guys have ruined the reputation of the whole dairy industry. People don’t trust milk. But in the future, China’s dairy industry will develop and have more controls,” said the 39-year-old Cui, who spent a year studying cattle-raising techniques in Japan.

The increased scrutiny also extends to the top of the supply chain, with government inspectors posted at all the dairy factories in China to monitor them.

For dairy suppliers, the measures are a form of security, said Li Chunlan, 41, who owns a milk collection station near Hohhot. She believes honest suppliers are being penalized for the actions of a few unscrupulous operators.

“If the government had taken measures earlier, then there wouldn’t be such an incident like this,” she said. “The problem has been the lack of controls and inconsistent quality. It’s existed for a long time. I just worry about what happens when the inspectors leave.”