Milk crisis to cost billions putting millions of job at risk
At yesterday’s meeting of the State Council, or Cabinet, the government stressed that “China's dairy production and circulation has been chaotic and supervision has been gravely absent,” adding that it would punish companies, merchants and public officials involved in the contamination of milk products.
The meeting blamed dairy companies for “greed and ignoring people's lives,” but did not comment on the reasons behind the early cover-up of the problem which was first reported on 2 August, just a few days before the Olympic Games.
Meanwhile melamine is showing in different places. In Hungary, melamine has been found in products served in several Chinese restaurants, the agriculture ministry's food safety officer, Miklos Suth, said. However, amounts found did not reach dangerous levels. Melamine-tainted Nestle products were also being examined.
Finland has withdrawn Chinese Koala biscuits and White Rabbit sweets from the market as a precaution till test results come in.
Japan has stepped up inspection of China-made animal feed and pet food that may be laced with melamine.
Iran's Health Ministry said two days ago that it would ban the import of all Chinese dairy products.
Lebanon today confirmed it was banning imports of Chinese powdered milk and other products.
Economists are trying to figure out the cost of the scandal. Companies whose products were contaminated saw sales plunge 60 to 70 per cent last month from a year earlier, analyst Lao Bing told the South China Morning Post. Dairy sales for the full year are likely to be 20 per cent lower than the 160 billion yuan (US$ 23.5 billion) posted last year.
The industry, which had been growing at a pace of more than 20 per cent over the past few years, employs about three million workers, mostly connected to the small dairy producers who account for 80 per cent of the mainland's milk production. Their livelihood will be affected.
In parts of northern China's milk producing heartland, farmers have had to pour milk down the drain. It is here that melamine is believed to have been added to deliberately watered-down milk to make it seem richer in protein.
In the northern province of Hebei, one of the centres of the crisis, authorities have agreed to pay farmers 200 yuan for each cow as a subsidy to keep them in business.
For Bram Wouters, who is leading a project to help China improve milk quality, it could take up to a year to establish more thorough and effective quality control along the chain linking farmers to consumers.
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