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Food safety

China to restructure dairy industry, target formula standards

By RJ Whitehead , 03-Jun-2013

China's cabinet has announced detailed plans to improve the quality of domestic baby milk powder in a bid to stamp out the constant food safety fears that have plagued the country.

A meeting of the State Council saw the government commit to better establish domestic brands at a time when stocks of formula across the Asia-Pacific region have been depleted on account of Chinese demand for foreign products. Lawmakers also pledged to increase the development of China’s dairy industry.

"Baby milk powder safety is not only an issue concerning people's livelihoods, but also a major economic and social issue affecting the nation's future. It is urgent for the government to upgrade the safety standard of domestic baby milk powder," the State Council said in a statement.

Industry restructure

Under the plan, the government will look to standardise the scale of cow farming of cows. It also plans to restructure infant formula producers and encourage mergers where possible.

To improve quality, the State Council said it aims to introduce the same quality standards to milk formula as it does to drugs, with electronic supervision codes to monitor each step of the production process.

It also plans to implement a supervision system for online sales of milk powders, although the statement did not elaborate about how this would be done.

Falling confidence

The cabinet's move follows plummeting consumer confidence in domestic baby formula following a series of scandals dating back to 2008. Since the melamine tragedy, which saw six babies die from drinking adulterated formula, and 300,000 seriously ill, Chinese consumers have been purchasing increasing amounts of milk powder from foreign countries or via online agents.

A 2012 report by AC Nielsen said that four foreign brands–MeadJohnson, Dumex, Wyeth and Abbott–had taken over nearly half of the Chinese market, with sales totalling over RMB38bn (US$6.25bn).

Some experts have called on Chinese dairy companies to develop their own pastures to ensure a clean and high-quality source for their milk.

The National Development and Reform Commission is expected to allocate RMB1bn (US$162m) this year for the development of new milk sources, according to the Dairy Association of China.