CONSUMER PROTECTION:

MELAMINE IN MILK SCANDAL GROWS-USA AND CANADA STILL DELAY BAN:

As more and more countries worldwide institute total bans on any products containing milk byproducts from China the Canadian and American governments continue to "hold the line" by only calling for recalls on a limited range of products. As Molly has mentioned before on this blog, this is very reminiscent of the actions of the Chinese government in delaying action on the scandal because of the Olympics. In Canada and the USA the reasons are very much elections rather than Olympics. This is especially true in Canada where there is already an ongoing food contamination problem in the listeriosis outbreak, where there are plans afoot to further decrease food inspection and where the Minister in charge has been essentially gagged so that he cannot put his foot in his mouth in the coming two weeks. Sneaky Stevie Harper is nothing if not a master of the idea of "staying on message".

Two more countries that have banned all products containing Chinese milk byproducts in recent days include the Democratic Republic of the Congo and, most importantly, yesterday Russia according to a report by the Russian Novosti News Agency. This should be seen as significant as the country of my mother's birth is hardly famed for decisive action for protection of its citizens in the case of consumer goods. If nothing else the Canadian and American governments should be shamed into action by the fact that even Russia takes the matter more seriously than they do.

Meanwhile the list of high profile "western" brands implicated in the scandal grows by the day. In addition to the Starbucks, Nestlé, and Heinz companies Pizza Hut in Taiwan (in relation to its cheese) , Oreo cookies from Kraft Foods and M&Ms and Snickers from Mars in Indonesia have now come under a cloud of suspicion, according to an article in the Asian News. The reaction of Kraft and Mars has been less than sterling as they disputed the Indonesian findings, claiming that the products in question are "counterfeit". We'll see. We'll see. Denial was an early feature of many companies eventually implicated in the contaminated pet food scandal last year.

The same article also mentions that the British Cadbury Company has withdrawn 11 of its products produced in China and distributed in Taiwan, Hong Kong and Australia. The article also notes the massive size of imports to both the EU and the USA of sweets ,in the case of the EU, and the milk "protein" (maybe) in the case of the USA in the past year. In the EU, according to an article in the VOA News melamine has been found in cookies marketed under the Koala brand. This article also mentions that melamine was found in Ritz Crackers manufactured by the Nabisco Company in South Korea.

According to yet another article in the Christian Science Monitor Lipton's milk tea has had to be pulled from shelves across Asia. Add Lipton's to the list. The article also notes a couple of interesting facts. One is "strong laws" cannot solve the continuing problem of food adulteration in China (or in many other countries such as the USA and Canada) because the "policing" aspect of such laws is missing. China is actually very "strict" in terms of its laws, and execution would be a probable fate of any arrested executive found implicated in this most recent scandal. Yet stern penalties hardly deter opportunists when the chance of "getting caught" are minimal given the state of inspections in that country, a situation that conservatives in both the USA and Canada see as an admirable situation. The second point is that the company most deeply implicated in the problem in China, Sanlu, is actually a joint venture with the New Zealand Fonterra (mentioned before on this blog) and the Chinese state itself. Yup, this problem developed in a situation where the government itself was the major stakeholder. Interesting ! According to an article in the New York Times over 200,000 children have been brought in for examination in the Chinese province of Hubei alone. the Chinese government has not issued any updates about the number actually affected since last week.

Meanwhile back in the USA the Department of Health has responded by finally promising to press for more stringent 'country of origin" labelling , according to an article at the ABS-CNN News. this comes in the wake of the American ban on milk imports from China (a basically nonexistent item) while not addressing the much more prevalent problem of "milk byproducts".Wait a minute here, for those with a memory. Weren't such "requirements" part of the "lessons learned" to be implemented from last year's pet food scandal ???? Love those promises ! Let's see what happens with the latest vows.

If you want to follow this story as it develops Molly can recommend the following blogs:

1)From a scientific point of view the Science Base blog.

2)For the political and "scandal" aspects (and practical recommendations) the Daily Kos blog.

The material on this matter is starting to accumulate in a pile beside Molly's desk. Last year during the pet food scandal the pile of printouts reached about 1.5 foot high in a box . Molly suspects that this matter may exceed that amount when all is said and done.

Meanwhile, here is yet another view from the IUF website, properly referenced this time for those with touchy feelings, on the role of New Zealand's Fonterra Group in these events.

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Fonterra and the China milk scandal - too many unanswered questions:

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State media in China first began reporting about babies falling ill from milk formula on September 11, after one baby had died from kidney stones in Gansu province. The first reports spoke of "an unknown number of infants in at least seven provinces and regions suffering from kidney stones after drinking milk formula marked San Lu".

San Lu is the joint venture partner of New-Zealand-based dairy giant Fonterra Co-operative Group.

The following day, as Chinese authorities revealed that the chemical compound melamine had been found in samples of baby milk powders, Chinese media reported that the San Lu Group had issued an immediate recall of milk formula made before August 6. The only comment that could be drawn from Fonterra was, "We understand that the product involved is only sold in China."

On September 15, as the Chinese media reported a second death from melamine-laced milk powder, the New Zealand Prime Minister announced that it was her government that had blown the whistle on the tainted milk scandal and set off the recall following the failed attempt by Fonterra to have its joint venture partner's products removed from sale.

That same day, Fonterra issued a statement which was stunningly ambiguous and evasive. They revealed that they had been advised of the contamination of baby formula at a San Lu Board meeting which had taken place on August 2! The statement goes on to say that they "pushed hard" for San Lu to recall the formula and that San Lu "immediately implemented a trade recall of infant formula" followed by "a full public recall of all infant formula". However, this "immediate recall" didn't happen until September 12 - 5 days after the New Zealand government alerted the Chinese government after having been alerted by Fonterra 3 days before.

What was Fonterra doing between August 2 and September 5, when it took the step to inform the New Zealand government?

At a media conference on September 24 to announce its 2007/08 results and cash distribution to farmer-shareholders, Fonterra management offered an answer to explain its scandalous omission: "We firmly felt the most effective way to get the product off the shelves and away from consumers was to work within the Chinese system".

But did it take one month for Fonterra to realize that working within the Chinese system wasn't working? The long history of official complicity and complacency in the face of food contamination scandals in China should have been taken as a call to immediate action.

Amazingly, company management continues to contend they had done all they possibly could during this period, and are now trying to relativize their responsibility by calling San Lu's handling of the melamine scandal "appalling" and accusing them of having attempted to cover up the contamination since December 2007.

Fonterra's own handling of the crisis can only be called a cover up - not only of the contamination scandal, but of its own negligence. Why was Fonterra not aware that San Lu had been receiving complaints about contaminated milk powder since December 2007? The answer might be found in the company's own admission that only one of its 3 directors on the Board of San Lu is a Mandarin speaker. Unofficial websites had been asking questions about tainted milk powder from San Lu for months. Why was Fonterra not monitoring these blogs about food safety? Why did Fonterra fail to put people and systems in place to ensure standards and product safety? Why did it fail to put any efforts into securing the safety of the supply chain?

It is clear that working within the Chinese system has not brought the hoped-for results. Four babies have died and some 50,000 more are ill from adulterated milk powder; Fonterra has taken an impairment charge of the equivalent of USD 95 million to cover the cost of the product recall and loss in San Lu's brand value; and Fonterra's own goodwill has been damaged as the public continues to ask how the company could possibly have let this scandal for so long without publicly sounding the alarm.

Fonterra have talked about the tragedy of the deaths and the thousands seriously ill. They have talked about damage to the brand and loss to their investment. What they have not talked about is that their negligence in China and damage to their reputation puts jobs and livelihoods at risk, including in New Zealand where their products represent 25% of export revenue.

CURRENT EVENTS-CONSUMER AFFAIRS:

HALF THE WORLD BANS CHINESE MILK PRODUCTS WHILE CANADA AND USA DITHER:

The list of products and companies implicated in the growing scandal of melamine contamination of milk and milk byproducts in China and its export markets continues to widen. At the same time the number of countries that have instituted either total or partial bans on Chinese products made with milk continues to grow. Here's the list so far:

*Bamgladesh (three brands banned and melamine testing to be done on all imports)

*Benin (powdered milk products)

*Bhutan (total ban)

*Brunei (total ban)

*Burundi (total ban)

*Cameroon(ban on milk and powdered milk)

*Columbia (ban on powdered milk)

*Costa Rica (total ban)

*Columbia (powdered milk)

*European Union (powdered milk, infant foods)

*France (total ban)

*Gabon (total ban)

*Ghana (total ban)

*India (total ban, three month moratorium)

*Indonesia (total ban)

*Ivory Coast (total ban)

*Malasia (total ban)

*Maldives (total ban)

*Nepal (total ban)

*Papua New guinea (total ban)

*Philippines (dairy products, infant food)

*Singapore (total ban)

*South Korea (ban on all products with powdered milk)

*Suriname (total ban)

*Taiwan (dairy products ban)

*Tanzania (total ban)

*Togo (total ban)

*Vietnam (total ban)

The above list, taken from several different sources, is undoubtedly out of date as I speak. Most problematic is Japan where melamine has been found in several different products either imported from China or made with Chinese milk based ingredients. Given the scale of the problem in Japan it is likely that a total ban will be instituted soon. Within China itself, and Hong Kong, companies that have had to institute recalls notably include the Starbucks chain, Nestlé and the Heinz brand. Meanwhile, according to an article in the Bloomberg Report the World Health Organization has stated on September 26 that there was "deliberate failure" in reporting the problems with the contaminated milk. Information on when concerns were first voiced and by whom have become a disputed matter. The main dispute is between New Zealand based Fonterra Cooperative Group which held a 43% interest in Santu Group, the first company identified as a peddler of tainted milk, and Chinese authorities. Fonterra claims that it began to pressure its Chinese affiliate last March, after the first complaints about their product has been received as early as last December. Chinese authorities fault Fonterra for keeping the news "private"until the matter was finally reported to city authorities in Shijiazhuang on August 2. The central government of China, however, did not begin any action until September 10. This was despite having definitely incriminated melamine as the problem as early as September 1.

It was not until September 13 that the Chinese Ministry of Health gave its first news conference on the matter and declared a national food-safety emergency. Since them heads have rolled as the Chinese government has attempted to attach blame to anyone but its central agencies. The mayor of Shijiazhuang has been dismissed. The CEO of Sanlu, Tian Wenhua has been arrested. This basic timeline is confirmed by an article in The Economist magazine (September 20,2008) entitled 'Formula for Disaster' (complete article to subscribers only). For a Chinese perspective and continued reporting on the matter go to the English language Danwei website.

Here we come to the crux of the matter. The timeline is suggestive of a deliberate cover-up of the matter on the part of central authorities because of one cardinal fact. The Chinese government had put considerable pressure on all domestic news agencies to report only "positive news" in the run-up to and during the Olympic and Paralympic games in Beijing. Did this also means deliberate foot dragging in the case of local and even central government authorities ? Or was it simple bureaucratic sloth and incompetence ? You be the judge.

What does this have to do with Canada and the USA ? Perhaps everything. The ruling parties in both countries are now in the midst of election campaigns. The last thing they would need would be a major "food safety" scandal on the level of what happened with pet foods and toothpaste last year, even though Canada is in the midst of at least one such problem, the listeriosis outbreak. This especially true as a full bodied move would expose the fact that both countries have done little or nothing to safeguard their publics from repeats of what happened last year.There would never be any smoking guns found in such a situation, as the pressure to "tone-down" any response would be conveyed more by subtle "suggestions" than anything else. It this perhaps the reason why most of the world has reacted much more vigorously to the problem than Canada and the USA have in only recalling a very limited number of products ?

Once more, you be the judge. China and the Olympics ? Canada and the USA and the elections ? Perhaps so.

CURRENT AFFAIRS:

MELAMINE IN MILK SCANDAL GOES WORLDWIDE:

The number of children affected by melamine adulterated infant formula in China continues to grow. According to the World Health Organization Outbreak Report (dated September 22) 40,000 children in China have been presented for medical treatment, and, at that time 12,000 were hospitalized. Four days ago there were three confirmed deaths related to the products, and, according to the WHO at least one child in Hong Kong has been hospitalized because of the poisoned formula.

While the WHO is, of course, an official and fairly reliable source its updates are often not "breaking news". More recent reports such as one from the CBC yesterday put the number of cases at up to 53,000 and the number of deaths at four (so far).

Meanwhile different governments are taking the matter with different degrees of "seriousness". Yesterday the European Union banned all imports of dairy based child and infant products from China, and India imposed a three month ban on all dairy based products from China according to Bloomberg.Com. In the USA and Canada so far only certain products have been flagged for recall. These include:

-Mr. Brown 3-in-1 Instant Coffee

-Nissin Cha Cha Deserts

-White Rabbit brand candies.

In Canada, at least, infant formula from China was previously prohibited from import, but it may still be available for sale, imported illegally given the lax state of inspection, at Asian food stores. The reader should note that none of the above three products that have been flagged so far are exactly "infant related" (unless your baby has to start his or her day with a good stiff cup of coffee). Like the pet food scandal last year the likely course of this story will be that gradually more and more products will be implicated, and governments such as those of the EU and India will be seen to have taken the prudent course, rather than depending upon "inspection" regimes that have been proven to be haphazard and the furthest thing from complete. According to the CBC article mentioned above officials from the Canadian Food Inspection Agency have said that a complete ban on Chinese dairy based products would be an "over-reaction" as "many are still safe". Does this remind anyone of what happened last year with pet foods ? It also begs the question of "how the hell do they know?". Have they checked each and every product, in all its various shipments (batch #s from China may be next to useless) ? That should take them the next two decades, devoting all their resources to this one question (2 centuries if a new Conservative government has its way and depends on the 'self-regulation-cough,cough, of the corporations). Finally...how about a poll of the parents in China about what would be an "over-reaction".

No doubt this story will grow in the days to come. To keep abreast of it please check the WHO Disease Outbreak Reports mentioned above. From an American perspective watch the Food and Water Watch website. The Center for Science in the Public Interest website also has current news, but their site is difficult to navigate to find current matters.

Despite the sang-froid of the Canadian officials some Asian food chains such as T&T have responded by pulling many more products than those named by the CFIA. Wise move actually. Down Hong Kong way, according to Canwest News Service, foods made under the very famous Heinz brand name, have been pulled by the company because melamine was found in some of the formula. Heinz none the less.

Ah, the age of globalization. Continued scandals such as this are continued proof of the anarchist contention that production of essential things such as foodstuffs should be as decentralized and local as possible. They are also proof of the anarchist contention that people cannot rely on the "benign" procedures of government and business for their protection. Independent organizations, whether they be unions, communities or research and regulatory agencies not funded by government, are as essential component of safety in a global world.

Here's yet another view, from the IUF website, about the meaning of this scandal, one that says that such things are not the result of occasional crooked Chinese businessmen but rather of the whole corporate system under which the whole world suffers today.

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Melamine milk contamination exposes the reality of 'global brands':

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Behind the melamine milk scandal lies an emerging crisis in corporate branding. One of the reasons for the heavy promotion of "global" brands was so that consumers wouldn't know (and would eventually stop caring) where products are made. Now with a major food contamination scandal that has killed at least 4 babies in China and sickened thousands, consumers are asking why their favourite "local" ice creams, biscuits and dairy products are made overseas.

The major transnational food companies spent the 1980s in a frenzy of mergers and acquisitions, buying up local brands and grabbing bigger market shares. The takeover boom continued into the first half of the 1990s and was complemented by a massive shift in company financial resources into marketing these brands, building an image and creating consumer loyalty. By the mid-90’s companies like Nestle, Unilever and Kraft had built up extensive brand portfolios and held the largest market shares in a range of food products - everything from cooking oil to ice cream, instant coffee and biscuits. They were also under investigation for monopoly practices and price fixing in several countries as a result.

By the end of the 1990s the new logic of financialization set in. The brands themselves became valuable financial assets and their value could be boosted through a blend of Wall Street wizardry and aggressive marketing rather than better manufacturing. So there was an irrational shift to rationalization: cutbacks, restructuring and consolidation. Less is more. Now fewer brands were better. By focusing on a few global brands in overseas markets the financial value of these brands would skyrocket. Nestle and Unilever called these their “billion dollar brands”, while Kraft would “shrink to grow” - with just 10 global “power brands” by 2008.

With the focus on “global brands" many of the popular local brands bought up in the 1980s and 1990s were sold off or simply disappeared. Local jobs disappeared too with them as plants were closed, merged or sold-off. In some cases the global brand was simply the logo alongside the local brand name ... then the name disappeared, and the jobs. Unilever’s "Heartbrand"” ice cream logo, for example, carries global recognition, but is known as “Walls” in the UK and Asia/Pacific regions as well as Selecta (Philippines), Kwality (India), Algida (Italy), Langnese (Germany) and Kibon (Brazil).

With global brands location no longer mattered. Production was relocated overseas (and relocated again and again), while aggressive brand marketing ensured that consumers continued to believe they were buying a locally made product with a global identity. The locally branded frozen fish stick could make a round trip detour of thousands of kilometers for filleting in China on its way to the supermarket shelf, with no questions asked.

The power of the global brand for companies like Nestle, Unilever and Kraft lies with their ability to shift production to countries like China, while loyal consumers believed it was the same product. As an added bonus, the companies could trumpet their "green" credentials and commitment to tackling global warming while loading up the products with thousands of additional food miles. Behind the familiar local brand stands a caring, concerned global company…

Consumers loyal to the brands would also continue to believe that their favorite Kraft, Nestlé or Unilever products were made by… Kraft, Nestlé or Unilever. The global branding exercise provided a convenient cover for these companies to outsource a significant portion of production to third party contractors, known as "co-packers", to manufacture their branded products. For example, one of the melamine-contaminated Nestlé Purina pet food products recalled in North America last year, after thousands of pets were sickened or died, was made by just such a North American co-packer.

Consumers who knew the reality of subcontracting were nevertheless supposed to derive comfort from the brand owners' supposed commitment to rigorous quality control. But finance-driven global branding encouraged a tidal wave of casualizing and subcontracting work within the companies' own operations. Even quality control personnel are managed and hired as casual employees through labour hire agencies. And since they're not formally employed by the company, they can't join the union.

The contamination of milk with melamine in China has now exposed the weakness of these powerful global brands. People throughout the Asia/Pacific region are suddenly finding out that their branded biscuits, ice creams and dairy products are made in China. When did that happen? And how long will it take for these products to find their way onto grocery shelves in the rest of the world - if they haven't already? Meanwhile the companies are rushing to assure consumers that products made outside of China are safe. But who is going to look beyond the global brand to the fine print that reads “Made in ...”? Too late. Companies like Nestle and Unilever long ago obscured the meaning of “made in” to refer to anything from packaging to the printing on the package!

Even the brands of companies like Fonterra and Friesland (both dairy cooperatives that went global) could suffer serious damage to their brands. Friesland’s Dutch Lady dairy products were pulled off supermarket shelves in Southeast Asia after contamination was found in Singapore. Instead of importing Dutch Lady from nearby Malaysia (where quality control is strictly regulated and the workplace is unionized) Friesland was importing from its factories in China where it has a minority ownership stake. Meanwhile Fonterra is trying to explain why it is Sanlu (its joint venture partner in China) and not Anmum made in New Zealand (strictly regulated quality control and unionized) that is tainted with melamine....

As the contamination scandal grows there is a greater likelihood that consumers will react against the global brand regardless of whether it contains milk or milk powder from China. The global brand will be tainted. Consumers will now associate Oreo (Kraft’s top global “power brand”, recently pulled from the shelves in Singapore after melamine turned up), Friesland’s Dutch Lady and Nestle’s Dreyer’s ice cream with melamine. Expensive and aggressive marketing may fix this. Maybe.

The financial impact of product recalls and lower sales (and possible lawsuits) and new marketing drives will be passed on through the company and won’t be limited to the operations in China. Workers in other countries will face more cost cutting and restructuring as a result.