Chinese premier vows safe dairy industry

BEIJING -- China's cabinet on Friday announced detailed plans to improve the quality of domestic baby milk powder, fulfilling its pledge to address a persistent food safety issue that hinders more robust growth in the world's second-largest economy.

In an executive meeting of the State Council headed by Premier Li Keqiang, the government vowed to improve the quality of development of the nation's dairy industry and help better establish domestic brands so as to regain consumer confidence.

"Baby milk powder safety is not only an issue concerning people's livelihood, but also a major economic and social issue affecting the nation's future. It is urgent for the government to upgrade the safety standard of domestic baby milk powder," according to a statement released after the meeting.

Under its detailed plan, the government will support the standardized scale farming of cows and encourage mergers and restructuring among baby milk powder companies to promote the dairy industry to develop in a standardized and modern manner.

The government will tighten supervision of baby milk powder quality in accordance with the same standards used for drugs by applying drug electronic supervision codes to monitor each step of the production process of the powder.

The supervision system of online sales of baby milk powder and milk powder imports will be worked out to ensure safety, according to the statement.

A specific campaign targeting baby milk powder safety will be launched to weed out unqualified baby milk powder source providers, baby milk powder companies, operators of milk collection stations and milk transport vehicles.

The government will also firmly adopt the accountability system for baby milk powder manufacturers and intensify the crackdown on milk powder-related violations, the statement continued.

China will establish a baby milk powder standard system according to international standards, improve the quality monitoring of such products in the market in an open, transparent and standardized manner.

The cabinet's move follows plummeting consumer confidence after a series of domestic baby formula scandals.

The industry lost consumers' trust after the Sanlu Group was found to have adulterated its infant formula with melamine, a chemical compound used to create plastic, in 2008. Six children died from drinking the milk, while 300,000 were sickened.

The Sanlu Group subsequently went bankrupt. The profits of other Chinese dairy companies suffered greatly in 2008.

Since then, Chinese consumers have been purchasing increasing amounts of milk powder from foreign countries or via online purchasing agents.

A 2012 report by AC Nielsen said that four foreign brands, namely MeadJohnson, Dumex, Wyeth and Abbott, had taken over nearly half of the Chinese market, with sales totaling 38.52 billion yuan ($6.25 billion).

Chinese consumers' craving for overseas milk powder has caused several countries including Australia, New Zealand and Germany to introduce quota measures to cope with China's growing demand for the products.

Experts suggested Chinese dairy companies should develop their own pastures to ensure a clean and high-quality source for their milk.

The National Development and Reform Commission is expected to allocate 1 billion yuan ($162 million) this year for the development of new milk sources, according to the Dairy Association of China.