Crisis in China's dairy industry also hits Arla

Arla Foods' Chinese joint venture partner, Mengniu Dairy, is among the dairies in China whose products have tested positive for melamine. These products have now been recalled and production at Mengniu Arla's milk powder factory has been temporarily suspended. Mengniu has begun an immediate investigation into the company's entire product range, including Mengniu Arla's. The authorities' conclusions so far are that the chemical was added to the milk at the many milk collection depots, which are independent of the dairies.

The Chinese authorities have analysed products from all players in the Chinese dairy industry following last week's announcement that melamine was found in products from the Chinese dairy company, Sanlu. One or more products from 22 companies - including Mengniu Dairy, Arla Foods' partner in the joint venture company, Mengniu Arla - have tested positive for melamine, a chemical that can cause kidney The Chinese authorities are currently dealing with the situation, which has affected the whole of the dairy industry. They believe that the milk was contaminated at the many independent milk collection depots where farmers take their cows to be milked. These depots resell the milk to the dairies.

Three out of 28 of Mengniu's samples have tested positive for melamine. All three products date from January 2008. Mengniu has not received any complaints from consumers who may have fallen ill as a result of the contaminated products.

Although Melamine is banned in food production in China, it is thought that the chemical was deliberately added to the milk to boost its protein content.

Mengniu has recalled all three products from the market and, in consultation with Arla Foods, suspended all produc-tion of milk powder at Mengniu Arla's factory in Hohot in Inner Mongolia until the company has conducted a full inves-tigation into the extent of the problem.

"The situation is extremely distressing for all the families who need milk of the highest quality to feed their children. It is extremely important that we get to the bottom of the problem so that consumers' safety can be guaranteed and con-fidence in the Chinese dairy industry maintained," says CEO Peder Tuborgh, Arla Foods. "Together with Mengniu and the authorities, we're doing everything we can to safeguard quality."

To protect Chinese dairy farmers' livelihoods, Mengniu Dairy will continue to receive and pay for the milk that the company's suppliers deliver, unless the milk shows traces of melamine. At the same time, Mengniu guarantees that every consumer who becomes ill as a result of the company's products will receive compensation double the sum the authorities require.

The current food crisis in China only affects products produced in China. Arla Foods does not sell Chinese produced products outside China.

For further information, contact 45 89 38 10 21.

Facts: Melamine, also known as Cyanuramide, is a chemical extracted from coal. China is the world's largest producer and exporter of melamine. Melamine is used for surface treatment of plastic, e.g. table tops Because both melamine – and protein – contains nitrogen (N), melamine can, in an analysis, make it appear that the protein content is higher than it actually is. As a result, the milk supplier can receive under false pretences a higher payment for the “better” quality milk. When melamine is mixed with other chemicals in the human body it can harm the kidneys.

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