Dodging dairy

When my daughter was born in March my wife, who is Chinese, insisted we only feed her milk powder carried into the country by friends from Canada or New Zealand.

Some people thought we were being unnecessarily cautious, but I agreed immediately.

I stopped consuming all Chinese dairy products four years ago after I visited some dairy operations in Inner Mongolia and realized that Chinese dairy companies have no real control over their supply chains.

Every large company has a "model farm" to show investors and government inspectors, with a few thousand ultra-healthy cows who are milked at state-of-the-art robotic facilities and given only the finest feed.

But the vast majority of raw milk comes from peasant farmers who have bought a couple of cows with loans from the big dairy companies and local governments. They feed their animals whatever they have on hand and are often tempted to water the milk down to make a little more from the buyers, who mix together milk of hugely varying quality. All sorts of preservatives and chemicals are then added to ensure the poorer quality milk doesn’t kill any of their customers.

I didn’t imagine anyone could be so unscrupulous as to add poisonous chemicals to the milk to make a few extra kuai, but the melamine-tainted baby formula scandal that began with Sanlu Dairy was eventually revealed to be an industry-wide problem affecting nearly every major domestic dairy company.

I was at the signing ceremony in Beijing a few years ago when New Zealand’s Fonterra bought 43% of Sanlu, and I remember thinking Fonterra didn’t know what it was getting itself into.

Holes in the net

When people move to China they are generally impressed by the absence of street crime and often comment how safe a country it is. But by most others measures of safety – legal and consumer protections, for example – most citizens’ lives are far more precarious and are likely to remain so as long as the current system of government exists.

Unfortunately, the underlying reasons why the milk scandal got so out of hand can be traced to things the Communist Party considers to be indispensable tools of its rule. These include controlling certain prices, controlling ownership and management of key parts of the economy and controlling the media.

 At the start of this year, when inflation hit decade-high levels, Beijing imposed price freezes on a range of food items, including dairy products.

Faced with rising input costs but unable to get higher prices from the big milk companies, the middlemen who buy milk from farmers started adding even more water than usual to the milk. Milk companies and government inspectors use a test for nitrogen as a proxy for protein in order to detect if milk has been watered down. The middlemen began adding an industrial chemical, melamine, which is used to make plastics and fertilizer and is high in nitrogen, so their substandard milk could pass the protein tests.

 Melamine is the same chemical found in Chinese pet food that killed thousands of pets across the US last year. In the midst of American media outrage that followed, I told anyone who would listen that while pets were dying in the US, in China it is children who are often fed poisoned products.

Flaws in the system

As long as local government officials own or control the companies they are supposed to be regulating, scandals like the melamine milk debacle will continue to happen.

Finally, the government’s need to control the media and its directive that no bad news be reported during the Olympic period meant the scandal had to reach unmanageable proportions before it became public – when the New Zealand government blew the whistle.

Thousands of infants whose parents couldn’t afford imported baby formula could have been spared terrible illness if Chinese journalists had been allowed to report on the scandal when it first came to light many months ago.

When the SARS virus hit China in 2003, the new leadership of Hu Jintao and Wen Jiabao publicly promised this sort of cover-up would never happen again. But, until there is serious reform of the political system to make Chinese rulers more accountable to their subjects, these scandals will continue to happen.