| Agriculture & Agri-Food Export/Import International News |
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Jan 12, 2010 >> Analyst unpicks impact of melamine scandal on Chinese dairy industry ; Guy Montague-Jones, A leading food analyst has warned that the latest Chinese melamine scandal will set back the local dairy industry at least two years.
Two fresh cases of melamine tainted milk in December have put into doubt the effectiveness of new legislation on food safety that came into effect last July.
Of particular concern is the revelation last week that the Chinese authorities took almost a year to act on reports that Shanghai Panda Dairy Company was selling toxic milk products.
Food safety legislation
Leatherhead market intelligence manager Chris Brockman said: “China has tried to make a big deal about food safety changes but clearly the processes in place are not as rigid or structured as they need to be.”
The fallout from the latest melamine cases is set to be significant. Brockman said the 2008 melamine scandal, which sickened 300, 000 and caused six deaths, virtually wiped out the dairy export industry.
This time around no illnesses have been reported but Brockman said the circumstances surrounding the Shanghai Panda case could be very damaging.
The analyst said the scare puts into question the effectiveness of the food safety measures taken since 2008, especially given the time taken to investigate and close the dairy plant.
He said the news is likely to set back the dairy industry by at least two years.
Chinese demand for dairy products may well be hit. Brockman said: “Chinese consumers are now very sensitive to these food safety issues.”
Value of reputation
Confidence among foreign buyers will also be eroded, and the fallout may well extend beyond the dairy arena. Alex Filz, a spokesperson for Dutch supplier DSM, refused to comment on how trade values would be affected, but said the new melamine cases will raise the importance of quality awareness and safety for foreign food manufacturers. .
Filz said the reputation of a supplier will be all important. Importers need credible assurances beyond certification.
Brockman said China needs to invest more in food safety and learn from other systems in developed counties if it is to restore confidence.
China overtakes Germany as biggest exporter
New trade figures show that China has overtaken Germany to become the world's top exporter.
According to data released by China's customs agency Sunday, Chinese exports surged by 17.7 per cent in December, compared to the same month in the previous year.
Exports for the last month of 2009 were $130.7 billion, raising the total for the year to $1.23 trillion, ahead of the $1.20 trillion forecast for Germany.
Last year wasn't easy for China's exporters as the global economic slowdown cut demand for the country's goods.
Every month since late 2008, the government has reported export figures lower than they had been a year earlier. Then in the last few weeks of 2009, the trend reversed.
China's gross domestic product expanded 8.9 per cent in the third quarter of 2009, up from 7.9 per cent in the second quarter and 6.1 per cent in the first, buoyed by $603 billion in stimulus spending.
China surpassed the United States as the biggest auto market in 2009 and is on track to soon replace Japan as the world's second-largest economy. China passed Germany as the third-largest economy in 2007.
With files from The Associated Press
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