In late September of 2008, the incidents of Chinese milk and powdered milk products laced with the chemical melamine became very public, and the outrage within China and other countries was highly charged.  Six infants died and more than 300,000 children were made ill, some seriously, as result of digesting tainted milk and milk powdered products.

At the time of the incident, I penned a Supply Chain Matters commentary expressing my personal outrage and calling for Chinese officials to once and for all crackdown on these scurrilous practices which had a previous history in other product areas as well.  As more and more information began to leak out regarding the incident, it became apparent that Sanlu Group, China’s largest producer of infant formula, was aware of the magnitude of the problem as far back as August, but neglected to make full disclosure due to the sensitivity for the upcoming Olympic games being held in China at the time. Other milk producers were also impacted, and brands such as Fonterra and Nestle were dragged into the effects of the scandal.

It’s a little over a year since these incidents and we can now observe the after effects.  China‘s Xinhua New Agency reported today that two people have been executed for their involvement in the scandal.  One, a Chinese farmer, was convicted of endangering public safety by dangerous means by producing more than 770 tonnes of melamine-laced milk.  Another, a major distributor of milk to Sanlu Group, was convicted of selling more than 900 tonnes of milk tainted with protein powder.  Both were executed.  The former board chairwoman of the Sanlu Group was convicted of manufacturing and selling fake or substandard products and was sentenced to life in prison.  All together, according to Xinghua, three individuals were jailed for life, and 15 were imprisoned for terms ranging from two to fifteen years in prison. One received a suspended death sentence.

I also came across a related news article from July which noted that Chinese dairy farmers in the home province of Sanlu Group were just getting on their feet as a result of the backlash from the incident.  An official of the Hebei Food Industry Association was quoted as indicating that the market has recovered to 70 percent of pre-scandal milk consumption. Market prices of raw milk which plummeted to 1.6 yuan ($0.23 USD) in December of 2008, had bounced back to 2.6 yuan per kg. by July, but diary farmers were still economically suffering. In all, the Hebei provincial government had to provide 40 million yuan in direct subsidies and 60 million yuan in low-interest loans to help diary farmers survive the crisis. Nationwide, the Chinese Ministry of Agriculture found that 3908 of that country’s 20,393 total milk collection stations, roughly 20 percent, to be defective and were shut down.

The consumers of China, the Chinese dairy industry, and the unscrupulous individuals involved have all paid a price as a result of China’s tainted milk scandal. China’s quick actions in response to this unfortunate and tragic incident are commendable. While exercising the death penalty in so short a time can be viewed as extreme, it certainly leaves little doubt of China’s intent to send a message that its tolerance for profit over the safety of consumers is waning.

We trust that China’s producers and governmental oversight agencies have learned from this incident, and will restore consumer trust in Chinese branded products.  Time and continued diligence will provide the real answer.

Bob Ferrari