There’s No Substitute for Inspections
The milk scandal in China about which I posted over the weekend and in which four children have been killed and at least 53,000 sickened through consuming milk contaminated with melamine continues to broaden:
New Zealand’s Fonterra Cooperative Group today criticized an “appalling” delay by its Chinese affiliate in reporting complaints of sick infants.
Fonterra wrote down the value of its stake in the affiliate Sanlu by 69 percent, Chief Executive Officer Andrew Ferrier said, after the Shijiazhuang, Hebei province-based maker was the first company identified as having produced tainted milk.
Sanlu received complaints in December and knew of melamine contamination in June, Xinhua said, citing the government. Fonterra last week said Sanlu’s board was informed of the contamination on Aug. 2, after receiving complaints in March.
“If they were lying about it, then they were lying about it to us too,” said Ferrier. “If this allegation proves to be correct that would be absolutely appalling.”
Fonterra in 2005 agreed to buy 43 percent of Sanlu for $107 million.
Companies that use milk in their products are quick to rally ’round and deny that they’ve got any problems:
Mars Inc., the U.S. maker of M&Ms and Snickers, said in an e-mail that its candy can be safely consumed because its China unit doesn’t use “any milk powder or other ingredients for any of its products from any company which has been found to be selling melamine-contaminated dairy products.”
Hershey Co., the largest U.S. chocolate maker, said it never purchased milk ingredients from China, according to a voicemail by spokesman Kirk Saville.
Nestle SA, the world’s largest food producer, yesterday said all its milk products sold in China are “absolutely safe.”
While they may not be receiving any product from companies that have been implicated directly, there is, unfortunately, no way for them to know whether any of their suppliers are reselling melamine-contaminated milk other than by testing. In a world in which a Chinese milk distributor can sell to a Singaporan importer which sells to a Swiss importer which sells to a candy manufacturer there’s no substitute for inspections.