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China’s milk formula pilot scheme ignores the real food safety issues

By RJ Whitehead , 22-Aug-2013

A move by Chinese authorities to begin a pilot scheme that will eventually require all baby formula sold in the country to be distributed by pharmacies or equivalent stores has been criticised for not addressing the real problem of safety.

The China Association of International Trade, which falls under the Ministry of Commerce, this week branded it a means to improve consumer confidence in formula products while removing fake brands from the market.

Initially, domestic and foreign baby formula will be sold in 20 pharmacies in Beijing and Jiangsu province as of October, before the pilot is extended to 20,000 pharmacies across 500 cities by 2015.

It is very strange and it’s going to take a lot of effort to make it work,” said Jeff Crowther, executive director of Beijing-based US-China Health Products Association. “It doesn’t solve the problem of quality issues, which are on the manufacturing side.

And logistically, it will be difficult as most pharmacies are quite small - out of the hundreds in Beijing there are just a handful even the size of a large convenience store.”

Supply-side grey areas

Instead, the authorities should be targeting the supply chain, where the real problem lies, said Crowther.

It’s not the right approach. Before [the recent Fonterra scare] happened, formula safety was a China-specific problem. The chain is fragmented with so many middle-men that nobody has 100% control of the supply of milk.”

In May, premier Li Keqiang announced that baby formula would be subject to the same strict supervision standards as medicines, with fake products being removed from the market. 

The latest move appears to be a direct result of Li’s pledge, although it stands to be seen what impact limiting distribution channels for formula will have on safety.

"The quality of baby formula products isn't decided by [point of sale] but by previous manufacturing processes, and the quality of the milk source and raw materials," Wang Dingmian, former director of the Dairy Association of China, told the Xinhua news agency.

"The focus of food safety efforts should be on the supervision of the production process. The quality of milk powder remains the same as the place of sale changes," he said.

Squeezing out the small players

And in a country taxed by a shortage of international-brand infant formula, the common retail practice of charging substantial one-off fees by pharmacy chains - significantly more than is the case among supermarkets - this barrier to entry is likely to be prohibitive for many smaller domestic brands that have never had their safety called into question.

However, this might be a moot point after the Ministry of Industry and Information revealed  plans to merge or shut down a large number of mainland dairies that make baby formula. 

The number will plunge from the current 128 to 50 by the end of 2018, China National Radio reported on Sunday.

"It's hard to achieve a high production standard when we have many scattered businesses," said the ministry's spokesman Zhu Hongren.

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