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January 7, 2011

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Closure warning for dairy firms

ALL China's dairy companies will have to renew their production licenses this year or face closure in the government's latest bid to ensure safety following the melamine-tainted infant formula scandal that killed six babies and sickened thousands.

Consumer confidence in the dairy industry nose-dived in 2008 after it was revealed that the industrial chemical was being added to watered-down milk to make its protein content seem higher and boost profits.

Despite a sweeping crackdown that included the execution of a dairy farmer and a milk salesman, melamine has continued to show up in Chinese dairy products.

Zhi Shuping, director of the General Administration of Quality Supervision, Inspection and Quarantine, told a conference in Beijing yesterday that all dairy product makers would have to get new production licenses this year or be closed.

Zhi said the measure was to improve quality and safety in the dairy industry. Small plants with low quality standards and poor production facilities would be shut.

China seized more than 100 tons of melamine-tainted milk powder last year. Melamine, which is used to make plastics and fertilizers, has also been found in pet food, eggs and fish feed. The chemical can cause kidney stones and kidney failure.

The scandals have hurt an industry dominated by the Mengniu, Bright Dairy and Yili firms. According to a survey last year, Chinese consumers were still not confident about the quality of domestic milk products. Growing concern over product quality has driven up imports since early 2009.

China is now the world's largest market for whole milk powder. Imports are estimated to have nearly doubled to 340,000 tons last year.

"The strength of Chinese import demand for milk powders reflects continuing consumer concerns about the safety of domestically produced products following the detection of further products contaminated by melamine in 2010," the Australian Bureau of Agricultural and Resource Economics and Sciences said in a report.

Around 90 percent of whole milk powder imports are supplied by New Zealand while Australia supplies about 5 percent.




 

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