China is in the news for milk, again. This time it is China Mengniu Dairy Company, the nation's largest dairy producer according to Bloomberg News – China. Mengniu was found to have tested positive for aflatoxin – likely from moldy feed. Yesterday the publicly traded company dropped 13.4 percent ($1.4 billion U.S.) in market value.
Consumers in China have been rattled in recent years with multiple milk scandals. While this might seem to be a boon for non-Chinese producers of dairy products, we worry that it could simply lead to a distrust of all milk products with repeated scandals. China's trouble started in 2008 as melamine (added to raw milk to boost protein levels) sickened several thousand infants and killed a handful.
In April 2011, a Chinese dairy farmer was caught adding salt nitrite to a neighbor's milk. That isolated case caused 3 deaths and hospitalized 36 people. Just two weeks ago, the farmer in that case was sentenced to death.
Following the investigation from the original melamine scandal and the nitrite case noted above, China shut down 45 percent of their dairy companies (likely 45 percent of the farms or factories, but not 45 percent of the milk or products). Also, in 2011, some pig farmers were accused of feeding illegal supplements to their animals.
We're sure that China will continue to move forward, but it will be a slow and developing process. While consumers have had other issues with products from China in the past (lead paint on toys as recently as 2007) those fears have largely been subdued. But we've heard rumors that things like antibiotics just don't carry the harsh penalties as they do in the U.S. We won't spread rumors, but let's just say hot tanks or trucks wouldn't cause us much concern, financially.
So that leaves us to answer the original question: What is going on? China has two routes it can take with its ever-growing population:
1. Follow the methods and red tape of the Western world to prevent most of the outbreaks.
2. Rely on other countries to supply their food.
While we cannot imagine a system where China is not a large food producer (world leader in pork production), it is also hard to imagine a time where you have no problem pouring a glass of milk with "produced in China" stamped on the bottom.
