Check on China: Food safety

If there was ever a situation that fits the Chinese saying “crisis brings opportunity,” the current eruption of safety concerns for China’s food industry may be it. With the problem as widespread as it is, there is a huge demand for products that are safe, and investing in those companies that can meet the demand will likely bring nice returns.

For the past few months, it seems that not a day goes by without scary news concerning China’s food. One day it is Chinese catfish, bass, eel and shrimp containing high levels of cancer-causing toxins. Another day it is toothpaste made from diethylene glycol—the poisonous chemical found in antifreeze. Even Chinese-made pet-food could not escape the wrath, with some animal feed containing melanie—an industrial chemical used to make plastics and fertilizer. 

Considering that China feeds 1.3 billion people every day, the incidents are still uncommon in the grand scheme of things. However, the problem is still a major one. China’s Health Ministry reported around 34,000 food-related illnesses in 2005, with at least 235 deaths—half of which were caused by poisonous chemicals in the food. The rest were from bacterial contamination and other causes. Total average daily caloric supply has jumped from 2,000 kcal per person in the 1970s, to around 3,000 kcal today, with the inclusion of more meats in the diet. The result is a booming food processing industry whose annual revenues rose 17% to $248 billion in 2005.

The obvious trend is that as Chinese consumers become wealthier, they will demand not only more food, but also safer food. This for sure will drive the development of a food safety infrastructure with big money to be spent. The Chinese State Food and Drug Administration announced in early August that China will step up its enforcement and spend 8.8 billion yuan (US$1.16 billion) to improve food and drug supervision by 2010.  

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