Food Prices and China

Food Fears on the rise in China, and government seeks to improve supervision

The Big Q: To Eat or not to Eat?

That it is the question many people in China have to ponder, as a new wave of food safety frights has renewed fears in over food safety problems.

A growing number of Chinese people are concerned with reports of tainted watermelon, pork, toxic milk, dyed buns and other foods in recent months. Many Chinese have taken to the Internet to express their concerns about food safety.

Compared with the pessimistic opinions shared by many citizens, government officials are casting the issue in a relatively positive light, arguing that food safety has improved in recent years and continues to improve.

The percentage of food products that meet acceptable safety standards has increased by about 3% Y-Y in Zhejiang since Y 2007, according to Ji Shenglin, deputy director of the Zhejiang Bureau of Quality and Technical Supervision. 93% of food products produced in Y 2010 met or exceeded these standards, Ji said.

Analysts say that heightened fears about food safety are not without a certain degree of irrationality.

"Forchlorfenuron, a plant hormone that caused some watermelons to explode earlier this year, is legal for agricultural use. It results in earlier harvests and is not dangerous to consume. The explosions were caused by farmers applying the hormone at the wrong time," said Wang Jianwei, an official from the Zhejiang Department of Agriculture.

"In a similar case, there were media reports that ethylene was used to accelerate growth in bananas. These reports stirred public outrage, but in fact, using ethylene in this way is a common agricultural practice and is not dangerous in any way," Wang said.

Experts have called for better education of the public when it comes to food safety, saying that food safety fears are largely fueled by a lack of knowledge in the areas of biology and agriculture.

Zhejiang Province Vice Governor Zheng Jiwei sees a bright side to the public's sensitivity, however.

Several decades ago, when many people were struggling to break out of poverty, few people would even think of questioning the quality of their food, Zheng said.

The fact that people are paying more attention to health and food safety is a sign of increased social affluence, Zheng said.

In the meantime, the Chinese government has tightened regulations and worked to step up food safety checks since 2008, when six infants died and thousands of others were sickened after a well-known Chinese milk manufacturer was found to have sold milk tainted with melamine, a chemical compound used in manufacturing plastic and other materials.

China also adopted a food safety law in 2009 that requires food producers to be more responsible for the safety of their products.

However, policing China's food supply is an arduous task. It has been reported that 80 percent of China's 448,000 food producers and processors are small, decentralized workshops, many of them with fewer than 10 employees.

Add to that the task of monitoring and regulating more than 200 million small farms, and it is plain to see that the government faces a difficult challenge in trying to implement uniform food safety standards.

Experts also attribute the ineffectiveness of China's food supervision to the fact that there are too many bureaucracies handling food safety issues simultaneously.

The Ministry of Health is the county's primary agency for dealing with food safety problems, but the State Administration for Industry and Commerce is also involved, as are the State Food and Drug Administration and the Ministry of Agriculture.

The overlap of so many agencies leads to "blame games" when problems arise, leading some government officials to call for a new way to deal with food safety.

Some officials have called for the establishment of a new agency that will have the exclusive responsibility of ensuring food safety. As a result, food safety commissions have been set up in the cities of Beijing and Shanghai, as well as in Zhejiang and South China's Guangdong Province.

Several local authorities have also started to include food safety as a criterion for evaluating the performance of regional government officials. Negligence and corruption can also be blamed for some of China's food safety problems.

Ji Shenglin, vice director of the Zhejiang Quality Inspection Bureau, said that collusion between government officials and businessmen has obstructed investigations of companies that are suspected of engaging in illegal practices that may compromise the safety of China's food supply.

"Stronger government supervision is needed, but it is not a cure-all," Ji said.

"Companies should work to enhance self-discipline, and trade associations should also take responsibility for overseeing product quality," Ji said.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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