Dairy import rules get tougher

New regulations on imported dairy products from China's top quality watchdog are scheduled to take effect on May 1 to strengthen inspection and quarantine procedures, which analysts said Wednesday will likely cut import volume, though a price hike is unlikely thanks in part to an increase in smuggled products.

According to the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ), overseas dairy products for import will now need to come with official proofs the milk was sourced from healthy animals that were fed with no forbidden drugs. Domestic importers who fail to comply will be punished and blacklisted.

The new regulations will improve the quality of imported dairy products in China, as the GAQSIQ is not only tightening controls over foreign production but also strengthening its fact-checking on the breeding links of exporting countries, Wang Dingmian, director of the Guangzhou Dairy Industry Association, told the Global Times Wednesday.

While supervision of documentation will become stricter, there are no new testing items, so importing costs should change little and are not likely to cause foreign dairy producers to increase their prices in China, said Wang.

A Guangzhou-based industry insider who has been importing dairy products for more than 10 years told the Global Times Wednesday on condition of anonymity that present selling prices should allow domestic importers to completely cover the increased verification costs. He said that foreign dairy brands, sold in China, are the most expensive of any worldwide market.

But the impending regulations will lower the amount of dairy products being imported, since many current imports come from substandard milk sources which are no better or safer than domestic ones, he said, noting that sub-par foreign brands are very likely to turn to smuggling, which is not regulated sufficiently by the government.

During the first nine months of 2012, a total 140 tons of imported milk powder in China - half of which was meant for babies - was found by the government to contain excessive chemical residues or to be past its sell-by date, Xinhua News Agency reported Wednesday.

New Zealand-based Fonterra Cooperative Group, the world's biggest dairy exporter, announced on January 24 that the company had spotted potentially harmful chemical residues in its products.

However, the country's Prime Minister John Key was quoted Wednesday in China news portal huanqiu.com as saying that New Zealand is not concerned about the new regulations' effect on its dairy exports to China, since they meet top food safety standards.

Many imported foreign dairy brands, especially baby milk powder, are not selling well even in their home countries, but could still attract Chinese consumers who have distrusted the quality of domestic dairy products since the 2008 toxic milk powder scandals, causing a long period of increase in import quantity, said the insider.

Imported milk powder brands have grown their domestic market share from 30 percent before 2008 to more than 50 percent now, according to the China Chamber of Commerce of Foodstuffs and Native Produce, as quoted by the General Administration of Customs on January 25.