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Surviving company leads China's milk industry
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Sanyuan milk products were free of antibiotics, the company claimed, and in terms of the numbers of somatic cells and bacteria, and contents of milk fat and milk proteins, the Luhe-sourced raw milk not only passed national norms, but also met European Union standards.

The raw milk Sanyuan procured from external sources, about 20 percent, was supplied by dairy farms of varied scales. Since 2001 Sanyuan had contracted only with cattle farms for its raw supply. That was because they believed a farm of scale could afford quality control. And the raw milk underwent two tests before being accepted.

The practice had also to do with industry wisdom that "milk was best in the cow's breast", which made processors skip unnecessary intermediate links in operation and bring milk to consumers in the shortest time possible.

Sanyuan milk was not 100 percent safe, though. Internet sources mentioned a melamine case uncovered in Qian'an, Hebei, which involved a subsidiary of Sanyuan. A company source confirmed the rumor. The city of Tangshan, where Qian'an was situated, was heavily hit in the melamine scandal.

"Apparently something had gone wrong in the collecting of raw milk. Our own quality check had spotted the problem and the small amount of questionable products was kept in the warehouse, when government examiners arrived," he said.

Sanyuan's quality control system included third-party testing. And workers taste-drank every batch of milk products before the batch left the factory. Sanyuan attached great importance to quality, the company said.

Located in the capital city, Sanyuan had been, for more than three decades, a trusted milk supplier to many important places regularly, or on important occasions temporarily. This included Zhongnanhai, the seat of China's central government.

The Beijing Olympic Games was another example. Sanyuan lost to Yili in bidding for sponsor's supply. Yet, in mid-June it received orders for supplying dairy products to Olympics-related hotels, restaurants, media centers, and sports villages. Sanyuan apparently had not expected that. "Our reputation may be a factor," Wang Dan said.

Flawed system and food law

In the melamine scandal, some people blamed the graded standard for raw milk collecting. It enticed or forced, because of low prices, milking stations or farmers into illegal activities. Sanyuan's Wang Dan defended the standard. Melamine dealing driven by the desire to make more money arose from the human weakness of avarice. The graded system should not be a scapegoat.

It was true that some cows raised by individual households produced milk of inferior quality that might be rejected, or paid a price not sufficient to cover the cost. But that was not an excuse for melamine dealing. The solution would be that for some areas where local environmental conditions were adverse for dairy farms, cows should be given up for other, more suitable investments; and where the environment was promising, large-scale operation should be encouraged to aid adoption of technology and equipment to ensure quality control.

"Scattered household cow raising poses a high risk to the safety of dairy products," said Sanyuan Luhe executive deputy manager Qiao Lu. Scaled and standardized operation of dairy farms are expected to get help from the central government's newly announced reform resolution to allow rural residents a freer use of land they leased from the state authority.

A new, dedicated method to detect melamine has been widely adopted by milk producers. But a question remains. Given the length of time and scope of melamine malpractice, it has virtually become an open secret in the industry. The testing and quality check personnel can't have been completely ignorant or innocent. An explanation is that the milk company's rapidly expanding business scales leads to a shortage of milk sources, which forces them to collect milk loosely, turning a blind eye to poor quality raw milk.

On Oct. 9 the government published a norm defining the contents of melamine acceptable in dairy products. Different from earlier accounts, which declared safe milk as melamine free. Now officials with the National Center for Health Supervision and Inspection said small amounts of melamine could get into the milk via the environment or packaging materials. A small amount of melamine might be tolerated. But deliberately adding the chemical to milk was prohibited and would be punished.

Products with melamine contents exceeding the set limits, 1 mg/kg for baby formula and 2.5 mg/kg for liquid milk and other general-purpose formula or powder, would suggest deliberate human addition. The norm was supported by the World Health Organization and the UN Food and Agriculture Organization, they said.

According to a China Daily report, the U.S. Food and Drug Administration (FDA) said in early October that 2.5 mg of melamine per kg would not cause health problems, but added that any infant formula sold to the United States must be free of melamine.

An ensuing emergency notice issued by the same Chinese authority ruled that products dated before Sept. 14 in production, if they met the above norm and pasted with the label stating "Passed test on melamine content limit", were permitted sales on the market. And standard-conforming dairy goods produced after the above date might be sold without the label.

According to a Xinhua report, up to Sept. 23 a total of 1,644 groups of quality check experts were assigned to factories across the country to help ensure dairy food safety. The group to Sanyuan initially consisted of four people. Two stayed on, working on shifts like staff workers, Wang Dan said.

Before the scandal, China had given reputable brands test exemption, which in turn bolstered the brands' images. Companies like Sanlu clearly failed that trust. The melamine scandal prompted the government to terminate the practice in the food industry.

"Food is very important. It's not like, say, a refrigerator. If we bought a wrong brand, the machine won't harm us. But food can," Wang Dan said. She hoped consumers would not be manipulated by ads or other media.

"Testing is not all about ensuring safe milk products," Wang Dan said. Ethical conduct must be promoted as a corporate culture. "Otherwise other problems that tests cannot detect may occur," she said.

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