Arla, Fonterra sticking to scandal hit Chinese dairies

By Neil Merrett

- Last updated on GMT

Related tags Joint venture 2008 chinese milk scandal Fonterra

Two of the world’s leading suppliers and manufacturers of dairy goods have moved to play up their commitments in China as the legacy of the ongoing melamine scandal continues to impact on their operations.

Europe-based Arla Foods said late last week that production of milk powders through its China-based joint venture had recommenced, while export giant Fonterra denied press reports that it is actively looking for a buyer for its operations in the county.

Concerns are still raging globally over the contamination of Chinese milk supplies with the industrial chemical, which has been linked to the hospitalisation of thousands of Chinese children and four deaths. The scandal has since led to food and beverage products sourced from the country being pulled from shelves around the world over safety fears.

Arla test plan

Jais Valeur, executive group director for Arla’s Foods Ingredients division, said that it was in this market, that it hoped a new four-time testing system could begin to restore consumer faith, with a new labelling scheme provided by the group.

Production at the Mengniu Arla milk powder plant in Hohhot, Inner Mongolia, had been out of commission since 16 September when news of the scandal emerged.

Valeur said that the new melamine-free labels would only apply to products that passed a new testing scheme on all milk used in its products from when it arrives at the joint venture’s plant and throughout the production process.

”The first test is carried out when the milk arrives at our partner’s dairy. The second is undertaken when the milk arrives at our joint factory and the third is carried out during checks on the finished products in our own warehouse,”​ he stated. “Yet another test is then conducted before the products are dispatched to stores.

Fonterra denies sell off

Amidst such market uncertainty, New Zealand-based Fonterra has reportedly moved to deny that it has auctioned off its own troubled Chinese joint venture, Sanlu, over the weekend, at least according to press reports coming from the country.

A spokesperson for the company is reported to have stated that no sale had taken place, and although discussion were ongoing over the future of the venture, no plans had yet been finalised, according to the New Zealand-based publication, The National Business Review​.

Melamine fears

The melamine scandal, which has now been linked to kidney problems in thousands of Chinese children, is alleged to involve a number of dairy groups operating in China, such as Sanlu and Arla Mengniu.

Melamine is a chemical that can make it appear there is more protein in a product, and has been linked to causing kidney stones and other health problems.

Four babies have died and almost 13,000 were hospitalised after drinking San Lu formula contaminated with the industrial chemical melamine. San Lu had received reports that babies were falling ill as far back as December 2007.

However, more than 300 Chinese milk producers and retailers issued a joint statement last month promising to reject sub-standard raw materials, strictly inspect production, and take responsibility for product quality.

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