** RETRANSMISSION TO CHANGE OBJECT NAME ** In this photo released by China's Xihua News Agency, two babies with kidney stones receive medical treatment under the care of their fathers at a military hospital in Lanzhou, capital of northwest China's Gansu Province Thursday, Sept. 11, 2008. So far this year, Gansu Provincial Health Department has seen 59 kidney stone cases in infants, and at least one baby died as a result of kidney stones. (AP Photo/Xinhua, Zhu Guoliang)
SHANGHAI, China - A generation ago, when today's new Chinese parents were infants, milk powder was so scarce that it was one of the top items requested from travelers visiting from overseas.
A wide array of dairy products now lines supermarket shelves, and analysts say the boom has overwhelmed regulators. The discovery this week of an industrial chemical in baby formula and milk is just one symptom, they say, of unbridled growth in the dairy industry, where poor hygiene reigns and safety standards often go unenforced.
Authorities ordered testing of all dairy products and vowed to upgrade quality standards after four Chinese babies died and more than 6,200 fell ill from drinking formula containing melamine. Wider checks found the chemical in milk produced by several of China's biggest name dairy companies, according to Chinese authorities.
The melamine scandal "reflects chaos in the dairy products market and loopholes in supervision and administration," said a government Web site's summary of a Cabinet meeting held late Wednesday that was chaired by Premier Wen Jiabao.
"The dairy industry has just been developing too quickly. Dairy producers know how to make innovative new milk products, but they've ignored the issue of quality of the raw materials," said Lao Bing, manager of the Shanghai-based consultancy Mingtai Dairy Industry Sales Fund.
As was true in several other recent cases, the problems crept in at the lowest rung of the production chain, often the weakest link for Chinese industries.
"Everything on the raw materials side just depends on the milk producers themselves. They set their own standards," Lao said.
The infant formula scandal is the second in recent years. In 2004, at least 12 Chinese babies died and more than 200 suffered malnutrition after being fed phony formula containing little or no nutrition.
The latest incident has also raised doubts about the effectiveness of improved food and drug safety standards put in place after earlier scares over bogus or contaminated products.
Investigators say raw milk suppliers, in hopes of clearing more profit, watered down their milk to increase volume and then added the industrial chemical melamine, which is high in nitrogen and artificially appears to boost protein content.
Melamine is an industrial chemical used in plastics, as a binding agent, flame retardant and sometimes in fertilizer. Some of the infants who consumed formula tainted with the chemical developed kidney stones or kidney failure.
Most Chinese milk makers lack the equipment needed to detect such chemicals, said Chen Lianfang, a senior dairy analyst at Beijing Orient Agribusiness Consultant Co.
Few factories and farms adhere to health safety regulations, and even if they did, China's national quality standards on hygiene were set in the 1980s and are woefully out of date, Chen said.
"Milk that meets those outdated standards would be considered substandard in any other country and just be thrown out," he said.
Milk production has grown fourfold over the past decade to more than 33 million tons a year, as farmers rushed into dairy operations. The country has about 15 million milk cows, according to the government-affiliated China Dairy Industry Association, and is the world's third-biggest producer of milk.
Supermarkets offer dozens of milk products promising to maximize health through better nutrition. Families, both affluent city dwellers and poor farmers, have meanwhile shifted en masse to bottle feeding, often viewing breast-feeding as inconvenient and old-fashioned.
But about 80 percent of all milk is produced by small farmers who lack modern equipment or knowledge of dairy technology. Forage is scarce, feed is of poor quality and sanitary conditions on farms questionable, industry reports say.
"In China, the raw milk suppliers are mainly farmers lacking scientific skills. Some of them raise cattle just like they would pigs," said Beijing Orient's Chen. "You can imagine that if the initial source is tainted, how about the final products?"
Industry experts say the country needs more advanced testing equipment, stricter and more detailed regulations and better technology — including basic hygiene.
So far, officials have attributed all the illnesses linked to melamine-tainted formula to products from Sanlu Group Co., a manufacturer based in northern China's Hebei province.
But health ministry officials said a national investigation found melamine in products from about one in five dairy companies, including China's two biggest milk producers: Mengniu Dairy, China's biggest milk company and rival Yili Industrial Co., and Shanghai-based Bright Dairy.
"This is a grave lesson for the entire Chinese dairy industry," said Lao, of Mingtai Dairy Industry Sales Fund.