getting it

January 30th, 2013

Ah, good, evidence, finally, that people in New Zealand are getting it. In today’s NZ Herald are this piece by Christopher Adams entitled Swift Backlash over Dairy DCD and this piece by Fran O’Sullivan pointing out the glaring lack of a battle plan for handling the risk to New Zealand’s dairy exports. And it’s about time somebody pointed out the enormity of the situation, because the headline of this article is by no means the most extreme I’ve seen over the last few days:

后新西兰时代”的奶粉消费风向

Milk powder consumption trends of the “Post-New Zealand age”

Notice the “finance.qq.com” part of the address? QQ is far from a minor player in the Chinese internet. If it’s on qq, a hell of a lot of people are going to be reading it.

The word I translated as “trends” also means “wind direction”. You know what Bob Dylan sang about not needing a weatherman to figure that out. Apparently the MPI and Fonterra do need help from the met service.

From Adams’ article:

Biopure Health had seen its turnover doubling every week since the firm opened its network of New Zealand Milk Bar retail stores in China’s Sichuan province last year, Page said.

But he said sales promptly went “to zero” when customers found out about the presence of small amounts in DCD in New Zealand dairy products after the publication of a Wall Street Journal article that questioned the safety of this country’s milk.

Customers had even been returning formula to stores and asking for refunds, Page said.

Well, yes, Chinese parents do tend to be hypersensitive about the safety of their children, and not just because they’re generally allowed only one. As O’Sullivan writes:

The problem with this developing fiasco is that the major players have been addressing the issue from their narrow perspectives rather than that of Chinese consumers who have been the major driver of the New Zealand dairy industry’s rapidly increasing milk powder sales post the 2008 Sanlu melamine disaster, to the point where it provides 80 per cent of China’s foreign dairy imports.

Yes, exactly. Nobody has forgotten the melamine scandal, and as I discovered the other day, some are quite actively remembering Fonterra’s involvement in that. And it’s not just melamine, that was only the biggest of several scandals involving infant formula, and it emerged that some of the melamine milk had been hidden away, only to be put back on the market a year or so later when the dust had settled. Add to that the near constant food safety scandals, from illegal, toxic additives to last year’s unsold mooncakes on sale again this year, and I think you can imagine how stressful being a  parent in China can get. Chinese parents turned to Western brands of infant formula because they perceive Western companies as safer and less likely to cut corners or play fast and loose with safety and quality standards, and the turned particularly to New Zealand formula partly because many big European and American brands source their milk from New Zealand, but also because they’ve bought into the perception of New Zealand as being clean, green and pollution-free – a perception strongly encouraged in the dairy industry’s marketing here in China.

When you’re living in a heavily polluted city surrounded by constant food safety scandals and never quite knowing whether what you’re buying is genuine or fake, just knowing there’s an awful lot of fake stuff out there (including food, drink and medicine), the concept of a place with no pollution, pure and natural, whose food products are guaranteed to be free of any contamination, is powerfully attractive, to say the least. I’m looking out my window at smog so severe the media is openly discussing just how bad things have got and what needs to be done to fix the situation, then looking at photos of a New Zealand summer, and I know where I’d rather be raising my wee one. It’s simply not right to have to look a healthy, active toddler inside for fear of what the air outside will do to her lungs. Similarly, Chinese parents lost all faith in China’s dairy companies after the melamine scandal. They perhaps rather naively bought into New Zealand’s clean, green reputation. Now it turns out that Fonterra knew back in September of the DCD contamination, but said nothing – learnt a bit too much PR management from its Chinese partners, perhaps? But the country they trusted to supply pure, uncotaminated formula for their children now turns out to have contaminated milk, too? And they knew in September? And we, the consumers and parents, don’t find out until now? And MPI’s and Fonterra’s answers to our questions just somehow don’t seem entirely trustworthy… That’s one hell of a kick in the guts.

O’Sullivan again:

There was always going to be a major perception gap but there are no obvious signs that the industry and authorities had formed a battle plan to counter the trade risk.

and:

Trouble is by the time Worker – together with Fonterra China boss Kelvin Wickham – fronted the Chinese media he was already fighting a perception issue.

The vice-minister of China’s General Administration of Quality Supervision, Inspection and Quarantine, Wei Chuanzhong, had issued a “Please Explain” earlier that day asking for a “detailed risk assessment report” on New Zealand dairy products after the “potentially harmful” chemical residue was found in them.

AQSIQ was not satisfied with the New Zealand Ministry of Primary Industries’ rather cursory press statements.

They wanted to know exactly where the contamination occurred: which products, which batches and which companies were involved.

And again, exactly. We don’t have any information, really, we only know that some milk powder was contaminated. It’s one thing telling me that only a few products were affected and that the contamination levels were less than 1% of the EU standard – but hang on, the first reports I saw said there was no standard for DCD contamination, and you either can’t or won’t tell me which products were affected and what you did with them, and you apparently don’t have even the common courtesy to inform AQSIQ, who, if properly informed, would be able to confirm to the Chinese media that what MPI and Fonterra said was true (assuming it is true). So long as MPI and Fonterra behave this way and until we, parents trying to raise kids in China, have solid information confirmed by a third party (i.e. AQSIQ) to process, how the hell are we supposed to trust MPI and Fonterra?

Now, back to that qq article with a headline that should have Fonterra and the New Zealand government squirming. Here’s how it opens:

几年前的国内品牌“三聚氰胺”事件,让洋奶粉一度成为品质的象征。不过,上周新西兰恒天然产品被曝出含有微量二聚氰胺,国内消费者一时陷入了选择的困境中。在不少消费者还在持观望态度时,网络代购已经出现缩水迹象,同时,荷兰、英国等欧洲产地的奶粉迅速成为新宠。

The domestic brands melamine incident of several years ago instantly made Western milk powder the symbol of quality. But with last week’s revelation that New Zealand Fonterra’s products contained tiny amounts of DCD, Chinese consumers have fallen into a dillema of choice. As many consumers maintain an attitude of “wait and see”, signs of a shrinking of internet buying agents have appeared, and at the same time, milk powder from the Netherlands, the UK and other European producers have rapidly become the new favourites.

So, if we can’t trust those Kiwis, we’ll turn to Europe? I hope Fonterra’s paying attention.

In the next paragraph the reporter writes of shoppers in large supermarkets like Carrefour’s Fangyuan store and Walmart’s Xuanwumen store still largely buying by habit, but many more looking closely at the labels. And if you look closely, an awful lot of the imported infant formula is made in New Zealand. There’s not a lot of options for parents looking to avoid potentially contaminated New Zealand milk. And there’s these suspicious labels claiming their formula is imported, but not naming a country of origin, so the reporter asked a store assistant, who said that the main source countries of imported formula were New Zealand, Singapore and Ireland, among others.

Singapore? Really? Anyway, moving on…

The next two paragraphs present an interesting contrast. First, there is a shopper who had been feeding her baby formula from New Zealand. She’s worried and wants to swap to a non-New Zealand formula. The reporter says:

消费者的担心并不是多余的。

The consumers worries are not uncalled for.

Why? Because 80% of dairy products imported into China come from New Zealand.

And on the other hand are the store assistants, some of whom said they hadn’t heard of the DCD problem, others of whom said the authorities had issued an official notice that New Zealand dairy products were safe.

And then there are some interesting stats about the online trade in New Zealand-made infant formula. In the last 7 days, sales of imported New Zealand milk powder have dropped 50%, and are 50% lower than at the same time last year. On January 26, the sales figure for New Zealand milk powder purchase agents was “2”, on January 27 it was “0”. Many sellers have posted MPI’s notice assuring consumers that New Zealand dairy products are safe on their front pages.

That’s followed with the rather curious statement that the DCD contaminated milk discovered in September has been sold out, so everything on the market now is safe. Well, great, but how’s about MPI or Fonterra tell us which products and which batches were contaminated, just in case somebody’s got contaminated formula stored up somewhere?

So how does this article actually get to the trends of the “post-New Zealand age”? Well, apparently a large chain of German supermarkets are limiting customers to four cans of infant formula per purchase, and Dutch supermarkets are limiting customers to one can per purchase, while online sellers are struggling to fill orders for European infant formula thanks to the combination of high demand and restricted supply. And, of course, prices for European formula are going the way prices naturally go in times of high demand and tight supply.

And all of this has me wondering: Have MPI and Fonterra just gone and blown New Zealand’s ability to cash in on the China market? Or will they manage to somehow get their act together and repair the damage they’ve done? I guess they can consider themselves lucky that the severe pollution across much of China this month is taking up so many column inches and pixels, because what I’m seeing strongly suggests this is not by any means a minor bump in the road which will be easily crossed. Nope, this is going to require lots of hard work on their part.

 

more DCD

January 28th, 2013

As is my habit, I picked up a copy of 新京报/The Beijing News on the way to lunch. I was wanting to look at the report on the 4th big smog warning this month, which was the top headline on the front page, but the first thing I saw as I opened the paper was this. Yup, the top half of the front page of the business section was a big graphic on the New Zealand DCD milk incident. Page B03 was a full page of reporting on the incident, with the same reports getting a link reasonably high up on The Beijing News’ front page to an easier-on-the-internet-eye format here.

What in that page’s main article that grabbed my attention was, first of all, just how many times MPI CEO Wayne McNee was reported as saying that the DCD was not directly injected into the milk, but spread on pastures, thereby finding its way indirectly into the milk supply as cows ate grass that had been sprayed with DCD, and that the amount of DCD was tiny and only in a few milk powder products and not in other dairy products, and how many times Fonterra CEO Theo Spierings is reported emphasising that Fonterra’s products are safe. A quote from Spierings as an example:

“我们知道,部分消费者和监管机构心存疑问。我们必须打消他们的疑问。目前,我们正在和他们保持密切沟通,提供相应解释。我们拥有强大的科学依据证明恒天然产品的安全性,并且一再就我们产品的食品安全做出保证。”

We know that some consumers and supervision agencies have their suspicions. We must dispel their doubts. At present, we are maintaining close communications with them, providing relevant explanations. We have strong scientific proof of the safety of Fonterra’s products, and will prove again the safety of our products.

But more importantly, at the bottom right of page B03 was a short piece quoting two women, one Ms Ma, who already has a lot of New Zealand infant formula, sent by friends in New Zealand, stored up, and the other, one Ms Liu, seven months pregnant, who has already stored up some New Zealand infant formula. Ms Ma is quoted as saying:

无论事大事小,都不敢再给孩子喝了

Whether its a big issue or a small problem, I still don’t dare give this formula to my child to drink

and:

连新西兰的奶粉都有问题,真不知道以后到底该去哪买放心奶了。

even New Zealand milk powder has problems, now I really don’t know where I should go to buy reassuring milk.

I feel it safe to assume the 放心奶/reassuring milk is infant formula one knows to be safe.

Ms Liu wonders whether she should buy infant formula from Europe. Trouble with that is that several reports state that enormous percentages of China’s imported dairy products, including many big European and North American brands of infant formula, source their milk from New Zealand. Percentages that hit 80. For example:

由于国内近八成进口原料奶粉来自于新西兰,有业内人士认为,考虑到国内市场对新西兰奶源的依赖比较大,

Because 80% of imported milk powder in China is sourced from New Zealand, industry insiders believe that New Zealand milk sources are relatively trusted,

…and it goes on:

相关部门会尽快将此次风波平息

the relevant authorities will calm this storm as quickly as possible

And let’s hope so, and let’s hope that they do it properly, because going back to TBN:

1月26日,在新西兰部分奶粉被曝出含二聚氰胺残留物后,中国国家质检总局已紧急要求新西兰相关部门尽快提供奶粉的二聚氰胺含量、批次等详细情况。但相关部门尚未表态是否会对奶粉启动二聚氰胺检测。

As of January 26, after the revelation that some New Zealand milk powder contained residues of DCD, AQSIQ had already urgently requested the New Zealand authorities provide as soon as possible detailed information on the amounts of DCD detected in milk powder and the batches affected. But the relevant authorities have still not stated whether they will test milk powder for DCD.

And I have yet to come across a report stating that MPI has provided AQSIQ with the necessary information. Let’s hope that they have already done so, or at least will do so very soon, because the comments of Ms Ma and Ms Liu above illustrate what New Zealand’s biggest export earner is up against here – if people in the market for stuff, especially essential stuff like food, for their children, don’t trust your products, they ain’t gonna buy. And if you get a reputation for producing poisonous products for their kids, then your even more screwed.

Three straight days of my inbox being full of poisoned New Zealand milk. I’m quite impressed by New Zealand government and industry efforts to get their message out, but I’m still curious to see how this story plays out.

poisonous NZ milk?

January 28th, 2013

This does not look good. On Saturday I got home from a day of exams, and my inbox is full of reports of New Zealand milk powder containing toxic dicyandiamide (DCD). Some examples are here, here, here and here. Sunday’s news was the same, all DCD all the time. They all seem to refer to a Wall Street Journal report of DCD being found in New Zealand milk – this report? If so, it says Fonterra knew of the contamination before it launched its new shareholder fund last year, but didn’t report it. Somehow it’s not “material information”:

A Fonterra spokesman said Friday the company received advice from the government at the time that the low levels of DCD it found weren’t a food safety concern

It also reports that Ravensdown and Ballance Agri-Nutrients have suspended sales of DCD.

This Otago Daily Times report is interesting.

On the one hand, there are the optimists:

ANZ senior trader Alex Sinton said New Zealand officials had ”probably done everything behind the scenes” and ”smoothed things with the regulators”.

”It’s probably not such a big story even though people are arguing about whether it led the kiwi lower.”

Ha! Yeah, right! But I’ll get to that later…

There are also those with a more realistic view:

As no internationally set standard existed for DCD residues in food, because it had not been considered to have any impact on food safety, the detectable presence could be unacceptable to consumers and international markets, even in the small amounts found in recent testing, ministry deputy director, general standards, Carol Barnao said.

”Food regulators around the world are reflecting market demands with increasingly rigorous testing and, in some countries, there is zero tolerance to detected residues outside agreed standards,” she said.

And there are also lots of interesting details, like that DCD was developed to help control nitrate leaching into waterways,  that there’s no known food safety risk (doesn’t mean there’s no risk, but… ), and that:

Federated Farmers food safety spokesman Dr William Rolleston said the issue needed to be kept in perspective, as DCD-based nitrification inhibitors had been applied on about 500 dairy farms, out of about 12,000.

Ah ha. But then there’s the headline on that Hexun article:

八成中国进口奶粉都有问题?因为它们都来自新西兰

80% of milk powder imported into China is problematic? Because it’s all from New Zealand

Ah, yes, now that’s the kind of publicity New Zealand needs.

Apparently, 80% of China’s imported milk and 40% of its imported infant formula comes from New Zealand. But it’s really interesting to compare it with the ODT report. Compare the ODT’s calm, rational tone with the Hexun report. Not only does Hexun give a big, scary headline, it contains this statement:

双氰胺可用作三聚氰胺

DCD can be used to make melamine.

I’d be willing to bet that the final word of that sentence would appear to an awful lot of people in China like this:

MELAMINE!!!!!!!!!!

It then claims that DCD is commonly used by New Zealand farmers to prevent nitrates, which are harmful to humans, from leaching into waterways. Well, the ODT agrees with the use of DCD, but reports that of New Zealand’s 12,000 dairy farms, only 500 use DCD. And those figures come from Federated Farmers food safety spokesman Dr William Rolleston, so should be authoritative. What’s curious and confusing, though, is that a couple of paragraphs later Hexun says that only 5% of New Zealand dairy farmers use DCD, and then only 2 or 3 times a year, attributing that information to the Ministry for Primary Industries’ Carol Barnao, who is deputy director, general standards – again, what would seem to be an authoritative source. How you leap from “commonly used” to “5%”, I don’t know.

And Hexun then revisits the melamine issue by stating that DCD contains a tiny amount of melamine, but so little that the MPI couldn’t detect any in its tests. But the final paragraph takes us back to 2008’s melamine milk crisis, only this time with no mention of Sanlu. Nope. Fonterrra is the company named and shamed, with the reminder that the melamine milk caused the deaths of at least 6 babies and sickened 300,000 people. Yep, Hexun specifically writes “New Zealand’s largest company, Fonterra…” and Sanlu, its joint venture, is left anonymous. I find that most curious, because I remember back in 2008 everybody talking about Sanlu, but very few people picking up on the Kiwi connection. This strikes me as quite a drastic change in emphasis.

The second to last paragraph also contains an interesting sentence, especially in light of several instances of fake New Zealand infant formula or New Zealand-produced formula failing AQSIQ inspections last year:

新西兰政府的披露将可能导致中国政府对所有进口的乳制品进行全面、彻底、强制的检查。

The New Zealand government’s revelation could lead the Chinese government to carry out compulsory, complete and thorough inspections of all imported dairy products.

And now 新西兰时空 has a very well-timed post on Weibo under the #新西兰奶粉# (#New Zealand milk powder) hashtag, including images of MPI’s announcement, translated into Chinese, assuring consumers that New Zealand dairy products are safe. Scroll down for the English version if you need to. I wonder what effect that will have. I will be interested to see how this story plays out.

 

grass-fed beef

December 31st, 2012

Today’s news brought what looks like a very tiny puff-piece on CQN (中国质检网 – China Qualtiy Net? can’t find an English title) about a company in Ningbo, Runsheng Food Company Ltd, selling New Zealand grass-fed beef in Ningbo. What’s the big deal? Here’s what grabbed my eye:

草饲牛肉的营养成分比谷饲牛肉丰富,而且热量、胆固醇、脂肪含量都比谷饲牛肉低。

Grass-fed beef contains more nutrietnts than grain-feed beef, and also has less calories, cholesterol and fat than grain-fed beef.

That, plus the insistence that the cattle were raised in New Zealand pastures and that every step of the production process meets the requirements of China’s Food Safety Law, on a website owned by the 中国质检报刊社 (China Quality Inspection Press?), which is in turn owned by AQSIQ – i.e., even if it is a puff-piece, it’s in an authoritative publication – yeah, that’s the way you do it.

Healthy, nutritious, safe. Magic combo for selling food products here, and a very good way to command a higher price. It would be good to see more of this around. But there’s a definite lack of NZ produce on the shelves of my local supermarkets, and almost all the marketing I see is for infant formula.