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Dairy scandal casts shadow over food exports
Updated: 2009-05-08 13:51

Visitors were scarce at the Guangdong Dongtai Dairy Products booth during the third phase of the 105th China Import and Export Fair, also called the Canton Fair.

The third phase of China's largest trade event began here Sunday and ended Thursday.

Xu Haoming, who's in charge of external trade for Dongtai, said he wasn't surprised by the lack of visitors.

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Based in the Jiedong economic development zone of south China's Guangdong Province, Dongtai specializes in dairy products such as baby milk powder. It exports to Asian and African countries.

Demand has fallen because of the global downturn, but that's common to all industries, said Xu. The dairy industry has an additional problem.

"The blow to Chinese food businesses from food safety problems such as the melamine contamination scandal last year" has been almost fatal, said Xu.

The melamine-adulteration milk and baby formula scandal, which left six infants dead and almost 300,000 ill, came to light last September. It had a swift impact on China's dairy product exports.

According to the General Administration of Customs, dairy exports dropped 10.4 percent last year to 121,000 tons after the scandal made the headlines.

Xu said his company's exports are down 50 percent.

"The melamine contamination scandal has passed, but its negative impact lingers. There is a trust crisis for the Chinese dairy products industry," said Xu, "What concerns me most at the moment is how the credibility of Chinese food could be restored."

Dongtai is not the only company in China to feel the impact of concern over food-safety problems.

Century International, a trading company based in east China's Dalian City, Liaoning Province, didn't bring milk powder to the Canton Fair.

Han Wenjun, the commercial representative of Century International, explained that many countries, especially those in Europe, the United States and Japan, had raised standards for food imports after the melamine scandal. His company's export business had essentially vanished, he said, and the firm had been forced to shift to importing milk powder to survive.

Yue Jianping with Jinghong Foodstuffs, based in Quanzhou City, east China's Fujian Province, said the melamine scandal had tarnished the image of the entire Chinese food industry.

"The lollipops made by my company are free of toxic substances such as melamine, but we've felt the sting of the scandal and still have to make explanations from time to time," said Yue.

Thousands or even tens of thousands of companies might face similar questions. As of 2008, China had an estimated 500,000 "large-scale" food processing companies, along with 350,000 small and medium-sized ones, and more than 20 million privately owned businesses producing and selling food products. Authorities last year investigated an average of 200 fake food cases a day, mainly among smaller producers.

Chinese produce, fish and dairy items are rapidly becoming part of the global food chain. Food exports totaled $31 billion from January to November 2008, up 13.8 percent from the same period in 2007.

Credibility crisis

Xu said his company tried during the Canton fair to get the message out to overseas clients that most Chinese food was safe, and food scandals were sporadic and caused by a few businesses.

Ye Caihong with Aixin Foodstuff of Xiamen City, Fujian, said her company had tightened product quality control and inspection this year.

Liu Dawei, deputy manager with the external trade department of Linjin Food Industry of Anhui Province, said the credibility crisis had forced Chinese food businesses to pay more attention to product quality control.

Liu said his company, a jelly maker, had opened a technical research and development center this year and improved quality monitoring and testing.

Image improvement

The government has taken steps to improve food safety.

The Standing Committee of the National People's Congress, China's top legislature, adopted a Food Safety Law in late February. The law stipulates that "only those items proved to be safe and necessary in food production are allowed to be listed as food additives."

The law, which will take effect on June 1, also says food producers may only use approved additives. Companies that break the law face possible temporary or permanent closure.

Also, the Ministry of Health issued a circular in March to its local offices, urging them to step up prevention of food contamination and monitoring of food-borne illnesses. The circular covered the 16 provinces, autonomous regions and municipalities where food problems have been most prevalent.

Health Minister Chen Zhu said the ministry would create a national database covering food contamination and food-borne illnesses within two years. He also ordered hospitals and other health organizations to report food poisoning and other food-related illnesses promptly.

Huo Jianguo, chairman of the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-Product, said his organization had introduced new management methods to improve food safety.

These methods include encouraging and supporting processing businesses to build fixed ties with raw material suppliers and encouraging collective procurement.

Some Chinese companies have embarked on construction of a food safety monitoring chain.

Fan Xiaoshan, manager with the tomato and fruit marketing department of COFCO Xinjiang Tunhe, said it was imperative to exercise a full process of monitoring system from farmland to table to ensure food safety.

Although dairy exporters are still struggling, some foreign markets have reopened.

Xu noted that Turkey had lifted its ban on Chinese milk powder and the milk powder traded by his company had been allowed to reenter the market there.

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