Dairy Market in China still fragile

Today an article was published in the China Daily, which consequences this could have for firms like Feihe Int. (ADY), Rodobo Int. (RDBO) and Emerald Dairy (EMDY) have to been seen.

Quality testing procedures come under fire

BEIJING - Only 40 percent of melamine-tainted dairy drinks recently found in Central China's Hunan province have been recalled, and authorities are still hunting for the remainder, the local food safety commission said on Wednesday.

Experts said the reemergence of products tainted by melamine, the toxic chemical blamed for the death of at least six infants and causing 300,000 children to fall ill across the country in 2008, shows loopholes in food safety supervision remain and highlights a lack of qualified testers at local levels.

The bureau of industry and commerce in Xiangfan city in neighboring Hubei province issued an urgent notice on Nov 15, asking all local businesses to look for 50 packages of a type of corn-flavor dairy beverage that were believed to be melamine-tainted.

Each package contains 15 bottles, according to the bureau.

The drinks, produced by the Xiangtan Yuanshan Dairy Industry Company in Hunan, were tested and had a melamine level as high as 4.8 milligrams/kg, according to a statement issued by the Hunan Food Safety Commission Office on Wednesday.

A reading above 2.5 mg/kg suggests that melamine was deliberately added as an ingredient during production, according to a regulation introduced in October 2008, a month after the melamine scandal broke.

The statement said the company had produced 861 packages of contaminated drinks, among which 824 packages had entered markets in Hunan, Hubei and Jiangxi provinces.

As of Wednesday, about 345 packages had been recalled from Jiangxi and Hunan provinces, it said.

Further investigation traced the contamination to the Dongyuan-brand milk powder made in Northwest China's Qinghai province.

Earlier this year, Xiangtan Yuanshan bought 27 kg of the milk powder from its long-term supplier in Changsha, capital of Hunan. With all required quality reports provided, the company did not conduct any checks over the milk powder.

A test by a quality watchdog in Hunan showed that the melamine content of the milk powder was 68 mg/kg, far exceeding the national standard. The watchdog also said that the quality reports were fabricated.

In June and July, the milk powder was repeatedly tested and found to contain excessive levels of melamine by food watchdogs in Gansu and Jiangsu provinces, although it had passed tests in its hometown, Haidong prefecture of Qinghai province.

Quality control authorities in Haidong who provided the "qualified" test reports refused to talk about the issue, the Economic Information Daily reported on Wednesday.

The two testers in Haidong were not qualified to conduct such tests, the report said.

This latest case of melamine in Hunan adds to a spate of discoveries of melamine-tainted dairy products earlier this year, and Wang Dingmian, former chairman of the Guangdong provincial dairy association, said it is hard to say whether this new batch is part of the remaining stock from the 2008 scandal.

Wang said it was a shame that the source of melamine being added to dairy products had never been established and exposed to the public.

"The question of why melamine keeps entering the market has been puzzling me for a long time, and the closest answer I have is that problems could arise at any step in the production process," he said.

Wang said the lack of qualified testers and equipment contributed to some unreliable testing reports.

Zhi Shuping, minister of the General Administration of Quality Supervision, Inspection and Quarantine, acknowledged at a national conference in October that some quality inspection bureaus at county-level are ill-equipped and lack the expertise needed to do their job.

Wang also said that the central government requirement that all dairy producers check raw materials for melamine could be a heavy burden for small businesses.