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A food processing company in Central China's Henan province admitted on Monday to selling dead ducks instead of incinerating them, as required by regulations.
The Huaying Group, a duck-breeding and slaughtering company with an annual output of 8 million ducks, said in a statement that it had suspended two managers and dismissed two duck breeders who sold dead ducks.
After the statement, the company's stock price fell by 1.5 percent to 18.33 yuan ($2.90) on Monday.
Huaying Group, listed on the Shenzhen Stock Exchange, has a worldwide sales network and its products are sold in the domestic and overseas markets, according to its website.
The statement did not say how many dead ducks had been sold, nor did it say where they ended up.
The statement was issued in response to a news report by China Economic Net on Thursday, which said Huaying Group employees sold hundreds of kilograms of dead ducks daily to several dealers.
The dealers would then partially process the ducks, including removing the feathers and internal organs. The processed ducks were sold to other dealers, who removed and sold the wings, feet and necks, according to the report.
Those products were sold at low prices. The feet were sold for 3 yuan a kilogram, instead of the normal price of more than 6 yuan a kg, the report said.
Under Henan provincial regulations on the slaughter of poultry and livestock, any dead ducks the company may have had to purchase under contractual obligations should have been incinerated.
Authorities in Huangchuan county, where the company is headquartered, said in a statement on Friday that the police and other agencies are investigating.
Huang Hongbo, publicity manager at Huaying Group, declined to comment when contacted by China Daily on Monday.
A breeder from the company told China Daily on condition of anonymity that some managers bought the dead ducks from breeders for 5 yuan a piece and then sold them to dealers for 5.5 to 6.5 yuan each.
Food safety has become a concern in recent years after reports of a number of scandals including melamine-tainted milk powder, recycled gutter oil and the chemical-laced pork.
In March 2011, the Henan-based Shuanghui Group, China's largest meat-processing company, was found to buy pigs that had been fed with "lean meat powder", a substance used illegally to stimulate muscle growth in pigs.
The scandal has prompted a national crackdown on the use of the "lean meat powder", and the courts in Henan province had tried 59 relevant cases by last October, resulting in 113 convictions.
Li Jia, a 37-year-old resident of Huangchuan county, told China Daily on Monday that he seldom eats duck products sold in the local market because of safety concerns.
"If I want to eat ducks, I will go to the countryside and buy free-range ducks from the villagers," he said.
Liu Jiaoyan contributed to this story.