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By Dominique Patton
BEIJING (Reuters) - China is expanding a pilot system that tracks the movement of meat and vegetables to the supermarket shelf as part of efforts to tighten supervision of its scandal-plagued food industry.
Under the program, which is voluntary, city governments are monitoring produce as its leaves slaughter houses and wholesale markets to make sure the same food arrives at the supermarket and to get unlicensed vendors out of the supply chain.
The system has been set up in 20 cities and is currently being rolled out in another 15 including Beijing. It should cover 50 cities by the year-end, said Li Zhenzhong, deputy chief of the Ministry of Commerce's market supervision department.
"They are trying to tackle the fact that in China, between the slaughter house and the retailer, they still have some illegal or blackmarkets," said Xavier Bodenes, national quality and food safety director at French supermarket chain Carrefour.
"They want to be sure that the 100 tons that left the slaughter house is the same 100 tons at final distribution."
From rat meat being sold as lamb to toxins found in rice, food scandals are a daily occurrence in the world's second biggest economy, fueling anger amongst Chinese who also complain about severe air pollution and poor water quality.
The avalanche of scandals has sown deep distrust of domestic brands, prompting Premier Li Keqiang to promise tougher rules.
Beijing has repeatedly urged more inspections of food processing facilities and meted out tough punishment to those found responsible for safety scandals.
The pilot system uses barcodes as well as tags that allow radio frequency identification (RFID) to transmit information about product batches to a central database.
The system was working well, with authorities frequently checking that the retailer has keyed in data to show a shipment had arrived, Bodenes said. It has already helped remove some unlicensed slaughter houses from the supply chain, he added.
Li said the new system would allow authorities to recall potentially hazardous products "within minutes", but he gave no details and other ministry officials declined to comment.
200 MILLION FARMERS NOT PART OF SYSTEM
Some experts said the system would have only limited use because it did not include China's 200 million farmers, where health standards can be low and regulation often has little reach.
Many large retailers run their own audits on what they source from farms.
"If you only go as far back as the slaughter houses, it's of some value but not much value. The decision to spray a certain pesticide or give an animal a specific antibiotic will usually be taken by a fairly uneducated farmer," said John Chapple, a consultant to food companies in China.
To try to tackle that problem, Beijing is encouraging a move to larger farms and farmers' cooperatives.
Consolidation is already under way in the domestic dairy sector, driven in large part by a 2008 safety scandal when milk formula tainted with the illegal additive melamine killed six infants. Other tainted milk incidents have emerged since.
China Mengniu Dairy Co Ltd <2319.HK> signed a $1.6-billion deal this month to take over the milk powder business of Carlyle-backed Yashili International Holdings Ltd. That was its second acquisition in a month.
But the meat and fresh produce sectors remain fragmented.
"China needs to encourage this kind of consolidation not only in the dairy sector, but also among its many other food manufacturers to create some national giants with the scale and resources to implement strong quality control to ensure product safety," China's state-run Global Times said in a commentary last week.
(Additional reporting by Fayen Wong. Editing by Dean Yates)