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New Zealand discovered this weekend that a milk powder factory in China, partly owned by the New Zealand dairy company Fonterra, has been selling contaminated baby formula. One baby has died and more than 400 are suffering from kidney problems.

Fonterra, which is New Zealand’s biggest export company, is owned by 11,000 New Zealand dairy farmers. Fonterra owns many dairy factories around the world. It owns 43% of the San Lu dairy factory while the Chinese government owns 57%. Fonterra has three people on the board of San Lu and a senior executive as part of the management team. San Lu is situated in the capital of Hebei province, just south of Beijing.

Tests have shown that the milk powder contains melamine, a product used in plastics, fertilisers and cleaning products. It contains nitrogen. It is possible that Chinese dairy farmers added water to their milk and then added melamine which made the protein level seem higher.

Customers first complained about the baby formula as early as March this year. The boss of Fonterra in New Zealand said they didn’t know about it until August 2nd. When they heard this news, they immediately called for all milk powder – more than 700 tonnes – to be sent back to the factory. The factory has stopped making any more milk powder. The milk powder was not exported to New Zealand although 25 tonnes was sent to Taiwan in June. It is still in storage; none of it has been sent to shops yet.

Many of the sick babies come from rural areas in China. Mothers who return to the cities to work, often leave their babies with the grandparents. Some city mothers also use baby formula.

China has had problems with contaminated food in the past and is very concerned about food quality. The Chinese government has promised an investigation.