(CN) An industry milked dry

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The mainland's dairy sector is plagued with problems

South China Morning Post

by Josephine Ma

Sep 21, 2008

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Ask a former owner of a small dairy company about the quality of the product

and his answer is blunt: " I never drink milk. "

" I don't know what milk to drink, " said his friend who provides technical

support to dairy farmers.

 

The experts have declined to give their names, but it is an open secret in

the industry that milk on the mainland, which has won favour with Hong Kong

customers in recent years for its strong flavour and thickness, contains

artificial additives.

 

While mainland milk may be a little too tasty for some, few consumers could

imagine just how many toxic elements are included, including industrial

chemicals like melamine.

 

" Most milk products in China have added artificial flavour, and what you

like is that artificial flavour, " said the first expert. " For thickness, it

is easy. They added thickener. "

 

Diluting milk with water is rampant in the dairy industry and milk agents at

milk-collection stations have developed innovative ways to make up the

nutritional content, some of which involve sophisticated technology,

insiders say.

 

" It is impossible for dairy farmers to add these chemicals to raw milk, nor

do I think the dairy factories do it themselves. It is mostly the agents who

collect milk from farmers and sell it to the procurement departments of

these dairy giants, " one source said.

 

Industry sources say dairy companies cannot shirk their responsibilities as

it is also an open secret in the industry that only those with close links

with dairy company staff can survive as agents.

 

" Dairy companies and milk stations belong to the same vested-interest

party, " the insider said.

 

The mainland dairy industry at the bottom is made up of a large number of

farmers, many of them keeping just a few milk cows in simple sheds in their

backyards. Above them is a thriving chain of intermediaries involving milk

agents and milk-collection stations, and above them are the dairy companies,

which receive massive support from the state.

 

The structure of the industry is blamed for the melamine scandal because the

underlying factor is the gap between the supply capability and the enormous

market demand for milk.

 

A total of 19 million tonnes of dairy products were produced in the first

half of the year, according to Liu Chengguo, director-general of the China

Dairy Association. And the milk for those products was provided by more than

2 million farmers, who keep about 14.3 million cows across the country.

 

Many have criticised the industry, the lack of dairy farms' economies of

scale, and poor technical know-how as the fundamental problems behind poor

milk quality.

 

One famous joke in the dairy industry is that farmers usually raise cows

like pigs - cows are not fed properly and they are not kept properly.

 

" Most cows have some sorts of illness. Some of them are like mud balls and

lie in mud and dirt and, of course, they have infections, " one expert said.

 

Ironically, raising cows and sheep like pigs was hailed by government

officials a few years ago as a shortcut to boosting the agricultural

industry.

 

As the recent baby formula scandal continued to snowball and strike all

major brands, many began to question the mainland's way of developing the

industry.

 

" One fundamental mistake the government has made is that they believe

raising milk cows is a labour-intensive industry, but it is in fact a

capital- and technical-intensive industry, " said one insider who did not

want to be named.

 

Most of the dairy cows fail to produce milk that meets the bacterial count

and quality standard because farmers lack the know-how.

 

" For other countries, if the bacterial count reaches 50,000 units per tonne

of raw milk, it has to be thrown away. But milk in China contains tens of

thousands - or even two million - units per tonne, " one expert said. The

high bacterial count makes it easy for milk to go off during delivery.

 

Another open secret in the industry is that preservatives - even hydrogen

peroxide - are added by milk agents to preserve raw milk before it is

delivered.

 

Poor-quality milk - either because of bad production methods or because it

has been diluted with water - means poor nutritional value, and that is

where the additives come in.

 

According to insiders, these additives include protein powder to fake the

protein level, oil to boost the fat level and whey powder to fake the

lactose level.

 

" If they bother to add something, do you think they will add edible

vegetable oil? " asked one expert. " Of course it is industrial oil. "

 

A mainland journalist said the dairy industry was also plagued by milk

tainted with antibiotics.

 

Since antibiotics are widely used on sick cows, farmers will use tainted

milk to feed calves. In times of shortage, however, they may also sell it.

 

The problem of tainted milk was particularly serious late last year as

consumption rose in winter and there was a shortage.

 

Some insiders doubted the official government figures of 14 million cows on

the mainland, arguing the number must be substantially lower because many

were killed when grain prices soared in 2006.

 

To make up the shortage late last year, dairy companies became more lax with

tests when buying milk from agents, turning a blind eye to malpractices.

 

" In the most serious case of faking, one can produce milk without a cow, "

said one insider.

 

The tainted Sanlu baby formula, which caused kidney stones in more than

6,000 babies, probably contained a high content of substandard or tainted

milk because the amount of melamine was unusually high.

 

According to one of the suspects arrested in the Sanlu milk scandal,

melamine was added by milk agents as early as 2005.

 

The authorities have arrested 18 and detained 28 over the scandal, including

Sanlu chairwoman Tian Wenhua.

 

A dairy industry source with close links to Shijiazhuang dairy farmers said

most milk-station operators in the city had been detained.

 

" If you want to know how common melamine is used, you can tell by the number

of people they detained, " he said.

 

But many are glad the scandal has at least forced the government to tackle

the industry's deep-seated problems.

 

Warnings from whistleblowers like former milk-station operator Jiang Weisuo

from Shaanxi were ignored, even though they were aired on CCTV.

 

While he did not mention melamine, Mr Jiang warned about the use of protein

powder and preservatives in raw milk.

 

Dairy companies are well aware of the rampant contamination, but they

usually cover up the problems by bribing journalists or anyone tempted to

complain, insiders say.

 

The government has tried to contain the crisis by gagging local media.

Mainland media has been banned from writing commentaries on the crisis and

ordered to use Xinhua reports.

 

But one question lingers: what is the government's responsibility? Beijing

insisted it was only told of the crisis on September 8, and Li Changjiang ,

head of the General Administration of Quality Supervision, Inspection and

Quarantine, admitted there was no protocol to test for toxic chemicals

before the crisis.

 

Some parents said they submitted samples for tests earlier this year, but

local quality-control inspectors assured them Sanlu milk powder was safe.

 

The State Council has rolled out a spate of measures to rescue the

devastated industry, including subsidies and better technical support for

farmers, as well as measures to stabilise prices.

 

But insiders said the most urgent task for the government was to pay farmers

and stop them from killing cows when demand drops. And it is essential that

co-operatives or large farms be developed so they can enjoy better economies

of scale.

 

Weeding out corruption in the quality-control process and boosting safety

controls, they say, are also essential if the mainland wants to restore

consumers' battered confidence.