A dairy farmer collects milk from cows on the outskirts of Shanghai. EPA /QILAI SHEN
A dairy farmer collects milk from cows on the outskirts of Shanghai. EPA /QILAI SHEN

Tainted milk leaves bitter taste in China



There have been consumer scares with a host of products originating in China, from children's toys coated with paint containing too much lead to tea contaminated with heavy metals.

Building Brics Emerging giants

Keep pace with the emerging economic powerhouses Brazil, Russia, India, China and South Africa Learn more

Yet when it comes to anxiety over the "made in China" label, the milk industry has probably had it worst. A 2008 scandal in which the industrial agent melamine was added to milk to increase the apparent protein content knocked confidence so badly that even now many Chinese consumers buy only imported milk powder, despite the higher cost. Last year, 406,000 tonnes of milk powder was imported.

It is no wonder the scandal still reverberates, given that half a dozen babies died from kidney complaints and hundreds of others among the 300,000 who fell ill were hospitalised when a substance more commonly used to make plastic plates was found in milk and milk powder.

The Chinese authorities took the issue seriously, executing two individuals for their part, but concerns remain about a system, often blighted by corruption, that allowed such adulteration to take place.

Experts say China's food industry and the quantity of processed foodstuffs produced has grown much faster than the authorities' ability to carry out adequate testing and checks.

Even last year, there were reports of the authorities detecting tonnes of milk products contaminated with melamine, although the consignments may have dated from the original 2008 contamination.

"This is an example of how the milk is not controlled in China," says Ezra Shoshani, a dairy industry consultant who has helped to set up a large dairy farm near Beijing. "If there were laboratories, government laboratories that were checking the milk, I am sure the melamine scandal would have been prevented."

Concerns go beyond melamine, with antibiotics contamination also highlighted. This is perhaps no surprise, given that, according to Mr Shoshani, "there is no clear protocol" on how to use antibiotics and for how long milk from treated cows should be kept out of the food supply. As with melamine, Mr Shoshani says it comes down to there being too few government laboratories to test milk.

"This is a big issue in China and it's not solved," he says.

Estimates vary, but there are thought to be between 12 million and 16 million dairy cows in China, and the industry is growing.

According to Alastair Pearson, a veterinary surgeon and the technical director of World Wide Sires, a cattle genetics consultancy, eight years ago, 90 per cent of milk in China came from herds of fewer than 10 cows. Now it is just 40 per cent. This is partly because after the melamine scandal, many small-scale milk collection centres were closed to encourage consolidation.

"It's thriving," Mr Pearson says. "A lot of people are advancing very quickly. There's been a quantum leap in the progress from small herds where animals were not looked after to these large farms where animal welfare is light years ahead."

So while China's dairy industry as a whole has yet to reach what are often called international standards, there has been progress in farming practices, quality control and other key issues. At the large farms with which he has worked, Mr Pearson insists "milk quality is taken seriously".

"The higher end of the industry is regulating itself," he says. "There's some wonderful milk being produced; clean milk free of contamination. It's not doom and gloom. In the last four or five years, things have come up quite a lot in terms of milk quality produced by these companies."

He says testing regimes have improved and so melamine-type scenarios in which contaminants are deliberately added to milk products are now rare.

Yet concerns linger over poor levels of veterinary training, lack of knowledge of animal feed, inbreeding among Chinese cattle and a lack of clear standards for bacterial control.

In such an environment, specialists say, opportunities for overseas investors that set up high-quality farms are considerable. By introducing best practices from overseas, Mr Shoshani has seen annual milk yields on the farm he has been involved with reach 11,600kg per animal, more than double the average for China.

"It's totally open for foreign firms, for foreign owners," Mr Pearson says. "For those who can succeed, and there are hurdles, if they can overcome those challenges and have a degree of operational success, it's profitable." So as a business case, entering the industry makes sense, even if public confidence remains fragile and quality standards are inconsistent.

"It's still a good time to invest in dairy. I think the market is growing. It's huge," says Karen McBride, the vice president for sales and marketing at Wonder Milk, a brand produced at a US-owned farm east of Beijing operating with 7,000 cows.

twitter: Follow our breaking business news and retweet to your followers. Follow us

The specs

Engine: 2.0-litre 4-cylturbo

Transmission: seven-speed DSG automatic

Power: 242bhp

Torque: 370Nm

Price: Dh136,814

THE SPECS

Engine: 6.75-litre twin-turbocharged V12 petrol engine 

Power: 420kW

Torque: 780Nm

Transmission: 8-speed automatic

Price: From Dh1,350,000

On sale: Available for preorder now

A Cat, A Man, and Two Women
Junichiro
Tamizaki
Translated by Paul McCarthy
Daunt Books 

The alternatives

• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.

• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.

• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.

2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.

• PayPal is probably the best-known online goods payment method - usually used for eBay purchases -  but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.

Ms Yang's top tips for parents new to the UAE
  1. Join parent networks
  2. Look beyond school fees
  3. Keep an open mind