China Drop In Dairy Exports Could Signal Commodity Rise
Dec 3rd, 2008 | By Irwin Greenstein | Category: Emerging MarketsWhile China may blame the rest of the world for its dramatic decline in exports, Beijing has no one else to blame but itself for the steep drop in dairy exports.
An article in today’s China Daily reported that the country’s dairy exports “have ground to a halt” in the wake of the tainted-milk scandal.
The latest numbers from China’s General Administration of Customs (GAC) showed that only 1,036 tons of dairy products were exported in October 2008, down 92% year-on-year. From January to September, the monthly average export of dairy products was 12,000 tons.
Once again, China is looking to the U.S. to rescue another of its exports. With the US-China Strategic Economic Dialogue (SED) on economic, trade and food safety issues slated to begin on Thursday, China is hoping it would pave the way for the Federal Drug Administration to accept the results of a Chinese agency that tests food safety.
If so, investors could see the move as fueling a rise in commodity prices such as grain, poultry and dairy.
After the melamine milk scandal in China, the FDA issued an alert on Chinese dairy products, slamming the door on many Chinese food exporters.
According to the China Daily, Guangzhou is one of the hardest hit areas, exporting only 35 tons of dairy products in October, down 94% year-on-year.
Liang Feng Food Group in Jiangsu province, which mainly supplies milk, milk chocolates, biscuits and cream candies, is among the companies badly hit by the melamine scandal and the FDA order.
So far, powdered milk laced with melamine has killed six small children in China and affected thousands of others. It causes kidney and liver disorders.
Melamine is an industrial product used to make plastics and glue. But it was an open secret that the chemical was added to agricultural products to thin products and boots protein claims.
More than 20 countries banned Chinese food products, including multinationals such as Cadbury’s, Heinz, Nestle and Unilever.
China’s promiscuous use of melamine came to light about two years ago when it was blamed for killing dogs and cats in the U.S. At the time, China promised to tighten food regulations, but until the milk scandal it appears that little had been done.
In the meantime, this is another indicator that the global food shortage will continue for the near future. On paper, this should help drive up some commodity prices. Whether or not this crimp in the food-chain supply is enough to overpower the general economic malaise remains to be seen.
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That's wild news. Cutting corners to make a buck is nothing new, but the willingness to harm babies in the process is another level of greed that karma is bound to fix.
The Chinese are greedy. In using melamine they've soiled their own nest. Now they are left with the consequences. No-one in their right mind would buy ANY food product from China, even the Chinese themselves are shopping elsewhere. Chinese sailors on day-leave from their ships here in New Zealand are buying baby formula like there was no tomorrow. The Foodtown supermarket in central Auckland, close to where ships unload their cargoes can't restock their shelves fast enough. China loses, New Zealand wins.