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Current as of 29/12/14 05:40PM NZST

Christopher Adams

The Business Herald’s markets and banking reporter.

China boosts monitoring of foreign milk formula

Announcement lends weight to suggestions stories critical of NZ-made product politically motivated.

Foreign brands quickly filled the void and New Zealand-made formula products now command a hefty premium, selling for as much as $70 a can. Photo / Thinkstock
Foreign brands quickly filled the void and New Zealand-made formula products now command a hefty premium, selling for as much as $70 a can. Photo / Thinkstock

China's Government says it will step up monitoring of foreign infant formula products and "nurture" Chinese-made baby milk brands.

The announcement, made after a meeting of China's State Council on Friday chaired by Premier Li Keqiang, lends weight to suggestions in this country that a series of critical news stories about New Zealand-made formula - broadcast on China's state-run CCTV last month - was politically motivated.

On its website the State Council acknowledged there was a crisis in consumer confidence over domestic infant formula and nurturing quality Chinese brands was an "urgent task", the South China Morning Post reported.

The council planned to standardise the breeding of dairy cattle and increase the scale of the domestic formula industry through restructuring Chinese dairy corporations.

Formula will also be treated as a medicine and a tracking system introduced so products can be traced back to their source.

China's 2008 melamine scandal - in which six babies died and around 300,000 became sick after consuming dairy products tainted with the industrial chemical - resulted in the virtual collapse of the Chinese infant formula industry as consumer confidence in domestic brands hit rock bottom.

Foreign brands quickly filled the void and New Zealand-made formula products now command a hefty premium, selling for as much as $70 a can.

One local infant formula exporter told the Business Herald last week that China's attitude towards New Zealand dairy exports had soured this year and Chinese consumers were being given a strong message from their Government that this country's milk was unsafe.

The CCTV stories about New Zealand formula were the result of "a policy decision from a country that doesn't want to be seen to be slighted by foreign countries and doesn't want to be seen to be failing its public on an issue where the public has expressed a great deal of concern", said China watcher Richard Phillips.

Most of the formula brands exported out of this country to China are made by firms that do not operate factories but instead have their products produced at contract manufacturing facilities in New Zealand.

The CCTV coverage picked up on this and suggested it was a concern.

Even the Ministry for Primary Industries has admitted it doesn't know how many formula brands are being produced at Government-approved manufacturing facilities in this country. The number is thought to be more than 200.

Dairy co-op Fonterra is planning to launch its own brand of infant formula, Anmum, in China this year.

China is the world's biggest baby formula market and annual retail sales are projected to reach US$12 billion ($15 billion) by 2016.

- NZ Herald

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