Dairy takes a hit in Chinese crackdown
China’s recent suspensions of milk products from factories in South Australia and Victoria reflect a rapid increase in interventions by the country’s food and drug administration.
In October last year, the administration suspended the importation of 296 food and cosmetic products from a number of countries for failing to meet Chinese standards. In May this year, 487 were suspended.
The licences for Parmalat’s Clarence Gardens milk production centre in South Australia and Bellamy’s infant formula and other products from Camperdown Powder in Victoria have been suspended — the former because the temperature at which it heats milk is not that required by China, and the latter because of unspecified concerns raised by an unknown third party.
President Xi Jinping said earlier this year that his government would impose “the strictest standards, strictest supervision, strictest accountability measures, and impose the strictest punishments” to ensure food safety.
China’s fast expanding dairy industry is also under a strong drive to buy local. The China Dairy Industry declared 2017 the Year of Chinese Milk, with a media campaign assuring consumers that “Chinese milk products meet international standards”.
It is seeking to speed up the rebuilding of confidence following the scandal of 2008 when it was revealed melamine had been added to some Chinese milk products to boost apparent protein content, causing thousands of babies to become seriously ill.
During a visit a few months ago to a milk producer in Zhangjiakou in Hebei province near Beijing, President Xi said: “I am completely convinced of the need for our next generations to grow up on quality milk powder.”
He said the communist party had taken many measures to ensure domestic producers continued to dominate China’s dairy markets. Agriculture Minister Han Changbin has said that “a country with 1.4 billion people cannot afford not to have a dairy industry. We have no reason to give up this massive market and hand it over to others”.
The current Five Year Plan that ends in 2020 requires the government to play a greater role in the dairy industry, including in “policy guidance, the control, support and protection of the sector overall, and in propaganda”.
But it allows for a continued increase in imports as well. The plan aims for the domestic industry to increase its production from 38.7 million tonnes to 41 million in the five years to 2020, with its share of the sector overall to remain at a minimum of 70 per cent. But in 2015, domestic production accounted for 77.9 per cent.
In the seven years following the melamine scandal, the quantity of imported milk products soared from 387,000 tonnes a year to 1.79 million tonnes. At the start of this period, a free-trade agreement with New Zealand came into effect, and quotas imposed on European Union dairy imports were removed.
The FTA with Australia has also now been in operation for 18 months. Under the agreement, the sanitary and phytosanitary measures of both countries that prevent the introduction of pests and diseases and help ensure food is safe for consumption remain in place.
But the FTA establishes a framework for greater co-operation and information exchange on SPS measures, and provides for a committee to help address problems.
Trade expert Alan Oxley, principal of ITS Global, said “the FTA is something of a bureaucratic nightmare, but refusal to allow Bellamy’s to import would appear to breach rights to trade provided in the agreement”.
A spokeswoman for Australia’s Agriculture Department said that “just as we expect other countries to respect our import conditions, so must we respect theirs when we seek to export our products”.
She said the government was continuing to seek the listing by China of more dairy establishments permitted to export products there, including infant formula.
Both the factories whose licences have been suspended are regularly audited for compliance with both Australian and Chinese requirements, and the former continue to be met — the department having no concerns regarding food safety issues from either.
Source: The Australian Business Reviews. Date: 2017-07-17