The elevation of China’s State Food & Drug Administration (SFDA) to a ministry level entity will consolidate the oversight of food safety issues under one umbrella. The Chinese authorities are hoping that the move will convince consumers that the government is serious about tackling the country’s food safety problems. Nevertheless, a number of challenges remain. David Green reports from Beijing.
The Chinese government announced plans last month that will see it establish a ministry – the State Food & Drug Administration (SFDA) – to tackle food safety issues. The SFDA consolidates the food safety duties of a plethora of bodies, including the State Council’s Food Safety Office, the food supervision branch of China customs and the State Administration for Industry and Commerce, not to mention the ministries of health and agriculture. Whether the Food Safety Office will continue to exist has yet to be decided, but the customs food role will continue.
While the expanded SFDA will also preside over regulating China’s pharmaceutical industry, the appointment of former National Food Safety Commission director, Zhang Yong, as its head signals that food safety issues will be a priority. Zhang’s contacts also indicate efforts to streamline and better coordinate China’s Byzantine government processes in the sector.
“Elevating the SFDA to ministerial level is more than a symbolic move to communicate to the public that the government is taking food safety seriously – they have been saying that for the last five years – but there has still been scandal after scandal and that has really eroded consumer confidence in Chinese food brands,” says James Roy, consultant at China Market Research.
According to Roy, the empowerment of the SFDA is part of a broader strategy to better regulate China’s food industry.
“There’s been a push for consolidation in the dairy industry particularly – for larger companies that are more easily controlled – and for vertically integrated supply chains,” Roy tells just-food.
But continued scandals in the Chinese dairy industry illustrate the scale of the problem.
Last month, Chinese police detained a Suzhou-based milk distributor of Swiss firm Hero Group’s Nutradefense infant milk formula under suspicion of repackaging the product with a substitute unlicensed for domestic sale. The news prompted Shanghai supermarkets to remove the product from their shelves.
This latest scandal has further undermined confidence in infant milk powder sold in China and highlights just how deep the lack of trust Chinese consumers have in domestic infant formula runs.
Chinese consumers are increasingly purchasing formula overseas, a trend has prompted retailers in various markets – from Hong Kong to the Netherlands, Australia to the UK – to ration purchases of infant milk powder.
And it isn’t just Chinese consumers the authorities have to convince. In order to benefit from a thriving export trade, the regulation of China’s food industry must improve.
“The only long-term solution, as surely China’s FDA is likely to impose, is the introduction of real, enforceable, food safety reforms targeting mainland China’s own dairy processors,” Richard Gilmore, president of the GIC Group consultancy and the Global Food Safety Forum, suggests.
Gilmore notes progress in negotiations between representatives of the US Food and Drug Administration and China’s Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) over improving the quality of Chinese food exports to the US. He says the FDA had achieved some progress in convincing China to use compliance procedures mandated by the US’ Food Safety Modernisation Act, but talks have stalled pending clarification of the role China’s newly beefed up SFDA will play.
That has prompted the US FDA to attempt a work around, notably by requesting a US$10m fiscal 2014 increase in its budget for food and drug safety inspections in China. “Despite the continued regulatory impasse, [this] latest China initiative may serve to strengthen [the Chinese FDA’s] hand by promoting science-based and data-driven compliance monitoring procedures [within China] as well as streamlined coordination among responsible regulatory agencies,” Gilmore said.
Resulting reforms may include greater powers to oversee the regulatory enforcement that has so far been lacking, for both domestic Chinese brands and foreign producers with operations in China.
The government has said the offender in the Hero case will be “severely punished”, and it is on toughening enforcement that the new SFDA may focus its early efforts. While Beijing has taken headline-grabbing measures, such as executing former SFDA head Zheng Xiaoyu for corruption in 2007, China thus far lacks the sophisticated legal system for awarding punitive damages to keep lesser offenders in check.
This would avoid the danger of over regulating in an industry that, overseas at least, has shown a marked willingness to regulate itself, notes Aidan Connolly, a vice president at global animal health and nutrition firm Alltech.
“Branded foods are not going to leave it to the government as they are extremely concerned about their brand,” Connolly observes. “KFC, Nestle, Danone and other multinational brands are ahead of the state on regulation but the government feels it needs to be ahead of the companies.”
According to Connolly this leaves the door very much open for foreign brands to co-operate with their Chinese counterparts in the area of food safety.
Lye Liang Fook, Assistant Director at the East Asian Institute in Singapore, points to the China-Singapore Jilin Food Zone in north-east China as an instance where this is already taking place. The project involves Singapore’s Agri-Food and Veterinary Authority advising on establishing a “food safety system and the regulations and enforcement measures that go with it” within the Jilin area. It will for instance regulate an integrated, disease-free pigmeat plant, expected to start exporting branded produce to Singapore in 2014.
Liang Fook acknowledges that the Jilin project is just a tiny part of a massively complicated jigsaw. “For China, systems and regulations are easy to set up,” he says. “But the challenge lies in enforcement, and this involves a variety of factors, not least individuals desire to follow through – sometimes such enforcement may go against established vested interests.”
While Beijing will be hoping that the newly created food ministry will make strides to boost confidence in China’s food safety at home and abroad, it is evident that a number of challenges lie ahead. Regulation of such a complex and large industry in itself is no mean feat. The development effective enforcement powers will be of paramount importance if the SFDA is to succeed in its task.