China: Food contamination crisis deepens

Fish, pork, and chicken contaminated with the industrial chemical melamine, along with milk and eggs

China’s food contamination crisis deepens by the day. More rigorous food testing, in the wake of September’s toxic milk scandal, has unearthed widespread use of melamine – a chemical used to make plastics and glue – in a range of animal products, including eggs and fish. Melamine is banned from food production as it causes kidney and liver disorders. This was tragically shown when four infants died and more than 13,000 were hospitalised after being weaned on tainted infant formula. Melamine had been deliberately added to thinned-out milk to raise its protein content – and profits. Chinese people are used to food scares. But the plight of small children, given the government’s one child policy, meant this scandal would inevitably have massive repercussions. Sales of milk and milk products have plunged since mid-September. The government has faced a storm of pressure effectively ending its Olympic ‘honeymoon period’.

The most recent food scares involving eggs, poultry and fish have produced full-scale panic among consumers. These revelations suggests that melamine has now become established in the human food chain in China, as a result of its deliberate addition to animal feed, once again as a way to boost protein content. “The feed industry seems to have acquiesced to agree on using the chemical [melamine] to reduce production costs while maintaining the protein count for quality inspections,” noted an editorial in the English-language China Daily (31 October).

According to the state-run Nanfang Daily, adding melamine into animal feed has become an “open secret” in the industry. This report said the practise started in the aquatic farming industry five years ago, as a way of faking higher protein levels. It was then copied in other agro-industries such as poultry. According to this newspaper the melamine added is from industrial waste material. And China’s food woes don’t stop at melamine; heavy metals such as lead, mercury and cadmium, pesticides and antibiotics have all entered the human food chain. All this is a huge blow to China’s long-suffering farmers who are being blamed – falsely – for the bad practises that have poisoned the food chain. Wholesalers in some regions are now refusing to buy farm stocks that are not accompanied by a (costly) melamine inspection certificate. One way or the other, the majority of China’s poor farmers cannot win.

Banned by 20 countries

These developments are a further major blow to the ‘Made in China’ label – at the worst possible time given the global recession. The toxic milk scandal led to global recalls of goods containing ingredients from China’s dairy industry. More than 20 countries banned these products, including some from global brand companies including Cadbury’s, Heinz, Nestle and Unilever. In Taiwan, the scandal further weakened president Ma Ying-jeou, whose popularity has sunk to 30% since his election in March. It has been seized upon by Taiwan’s pro-independence opposition party, DPP, to stage huge protests (500,000 marched in Taipei on 25 October) against Chinese imports and Ma’s policy of more ‘globalisation’ with the mainland Chinese economy.

The crisis also has global dimensions. There has been major penetration of China’s food and dairy industry by foreign multi-national companies, mostly through joint ventures with Chinese partners. The company at the centre of the toxic milk scandal, Sanlu Group, was 42% owned by Fonterra of New Zealand. As the scandal unfolded, at least 22 milk companies, many with foreign partners, and nearly 12% of dairy products, were found to contain melamine. Three months ago Sanlu was a prestigious company. It now faces bankruptcy or possible acquisition by a consortium of its rivals – no single company is likely to take over Sanlu, as its debts exceed 700 million yuan, not counting massive compensation claims.

While its dairy exports are small, China is one of the world’s largest exporters of food and food ingredients, including meats, seafood, beverages and vitamins. Now tests are being stepped up everywhere. Chinese cities, under pressure from shaken consumers, are testing a wide variety of food products for melamine. The problem of tainted eggs first surfaced as a result of tests conducted in Hong Kong a week ago. Melamine has since been confirmed in eggs from three mainland provinces (Liaoning, Hubei and Shanxi) after the first case came to light.

The central government now acknowledges that China’s food industry has suffered from “lax regulation” – a monumental understatement. While again scapegoating lower officials, the central government bears the main responsibility for this. In 2005 it exempted over 2,000 companies involved in dairy and food production – including Sanlu – from regulatory controls arguing these companies were of good standard and could regulate themselves. This decision was reversed in September as the scandal broke.

Two years ago, pet food exported to the United States was found to contain melamine. This came to light after the death of more than a dozen dogs and cats. This scandal led to promises by China’s government and food safety watchdogs to clean up the problem. Today’s – more serious – crisis shows that such promises cannot be taken seriously. Already at the time of the pet food scandal, The New York Times (30 April 2007) ran an article under the headline: "Filler [melamine] in Animal Feed is Open Secret in China”. Nobody in China’s government can claim to be surprised over the latest revelations. Likewise, in 2004, the China Dairy Product Quality Inspection Report found that adulteration of milk products was very widespread, having found urea, soap powder and starch being added to milk. But the Chinese governmental machine only acts when its hand is forced by mass pressure and public outcry. It then acts but with the overriding aim of silencing its critics, blocking any steps towards independent political association or organisation, and restoring ‘stability’ as quickly as possible.

Olympic cover up

“Three minister-level officials have resigned and a government investigation is going on. Whoever is responsible must be brought to justice. We need to protect the Made in China brand,” Chinese commentator Victor Gao told CNN. From such statements it is clear that the desire to protect China’s markets – and company profits – rather than the health and safety of its people is the foremost consideration.

China’s authoritarian system has also exacerbated the food crisis, as with the 2003 outbreak of SARS and the country’s worsening HIV epidemic. Central government censorship during the Olympic games – to protect the government’s prestige – prevented the tainted milk scandal emerging sooner, thus delaying emergency action that could have saved lives. The provincial government in Hebei, where Sanlu Group is based, knew about the melamine contamination and health problems among infants on 2 August, but the case received no publicity until over one month later, after the Olympics were concluded. Local media knew about the problem even earlier, after being contacted by parents across China. However, the reporters were unable to publish their findings because of strict media controls imposed for the Olympics. Food safety issues were one of several topics placed off-limits by government censors.

The situation in the Olympic city itself shows the devastating effect of this official negligence and censorship. Nearly one-quarter of families in the capital have fed their children milk contaminated with melamine, the Beijing News reports. Nationwide, 5,824 children are still receiving hospital treatment for kidney diseases caused by the contaminated milk; six of these are in serious condition.

“Permanent liver damage can be caused when crystals suddenly form into large numbers of tubules in the kidneys of children that have consumed melamine, causing chronic kidney failure and requiring dialysis and even kidney transplants later on in life,” reports Forbes magazine.

Even those infants that have survived melamine poisoning, therefore, may suffer long-term health problems. Many parents have become increasingly bitter over the government’s (mis)handling of the scandal. A common complaint is that the free medical treatment offered to tainted milk infants is inadequate and of poor quality. In numerous cases parents, either in groups or individually, have sought to take legal action against the companies responsible, but not a single case has been accepted by the courts still controlled by the misnamed ‘communist’ party. Officials at local and national level are desperate to close the book on this problem – to limit the damage to the ‘Made in China’ label.

Farmers to blame?

China’s leaders make ritual speeches about “learning the lessons” from this affair. But the chances of that happening are zero. Food contamination in China is as much part of the capitalist reform and opening process as the (slumping) stock market and the proliferation of new (empty) shopping malls. As one international analysis warns: “The tainted milk scandal in China reveals how corruption is intensifying in the country’s supply chain, reflecting socio-economic stresses that will increase as a result of the global economic downturn.” [Stratfor, China: The Economic Roots of the Milk Scandal]

As this report predicts – accurately unfortunately – there is worse to come on the basis of a system that puts profits before people’s needs, especially as that system is now entering a serious crisis.

China’s dairy farmers are mostly small-scale and extremely poor. Typically a farmer owns around five or six cows. Before the crisis broke out, Sanlu Group imposed lower prices on its dairy farmers at the same time as the price of animal feed has risen significantly. These ‘market-driven’ factors contributed to the widespread practise of manipulation of raw milk at collecting stations – first by watering it down and then adding melamine to restore its protein count. While today the dairy farmers have been cast as villains by the media, most had never heard of melamine before the scandal erupted.

The adulteration of the milk was most likely the work of station managers and middlemen. But much evidence also suggests that the big dairy companies that bought the adulterated milk knew this to be the case but elected to do nothing, fearing that more stringent quality controls would reduce supply and push up the wholesale price of milk. The last piece of this jigsaw puzzle is the connivance of ‘communist’ officials with the companies to protect them from public scrutiny and complaints over quality problems.

Economic roots

Two months after the scandal erupted, many dairy farmers in China face ruin. Official figures show that 72 milking stations in Hebei province for example have been shut down for failing to meet quality control standards. This is part of a nationwide crackdown on such stations. Typically, however, the small farmers have been left stranded by this policy, with nowhere to sell their milk. As China Daily reported, “The plight of dairy farmers have become so serious that authorities now fear that if they are forced to slaughter their cows, it will trigger a collapse of the mainland dairy industry.”

The only answer from the authorities, apart from some very low subsidies to struggling farmers, is to encourage them to place their cows “temporarily with larger farms” – a policy that again benefits the capitalists and big farmers at the expense of poor farmers.

As Stratfor’s report shows the toxic milk scandal has economic roots: “Chinese companies were already running on thin profit margins, and were pinched harder when the global economy began to change in 2008… From 2006 to 2007, dairy exports grew 157 percent, totalling $242 million – but in 2008 dairy farmers found themselves crammed between growing input costs (livestock, feed, facilities) and government-mandated price caps. Mengniu, a milk firm, has seen its share price drop 12 percent since October 2007 due to higher costs of raw milk (due in part to rising costs of grain to feed the cows) and price controls directed at the dairy sector (tightened on Jan. 16 to counteract inflation). Farms and their workers accordingly resorted to subtler cost-cutting methods to save themselves from diminishing profit margins.”

The widening food crisis in China shows the limits of bureaucratic-police measures as a means to reduce or mitigate the chaos and anarchy of market forces. Such measures are temporary expedients at best, while offering huge new opportunities for official corruption and often sacrificing the interests of the poor majority. What’s needed is a democratic socialist emergency plan to clean up the food industry and agriculture. This must be based on public ownership of industry under democratic workers’ control and management, alongside a return to collective farming but along completely voluntary and democratic lines, backed up by massive state support for agriculture. To prevent the destruction of the food chain and wider environment – deliberate or accidental – independent mass democratic organisations of workers, consumers and farmers are urgently needed.

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November 2008