Calling China's diary production and distribution "chaotic" and admitting government supervision "gravely absent", the State Council is planning an overhaul for the recovery of the nation's diary industry.

The State Council, China's Cabinet, held an executive meeting Monday on the nation's milk powder industry and approved draft regulations on quality control for dairy products.

State Councilors on Monday heard that the authorities had conducted across-the-board checks on liquid milk and dairy products and investigated food safety. All efforts had begun to pay off.

They noted that the Sanlu baby formula scandal had been a major public health incident and tarnished the reputation of China's dairy sector and the food industry at large.

The direct cause of the incident was illegal production, greed and ignoring of people's lives, the State Council said in a statement. "It is also exposed that China's diary production and distribution order has been chaotic and supervision has been be gravely absent."

Premier Wen Jiabao presided over the meeting. This was the second conference on the issue since the tainted baby formula scandal that broke in earlier September. The previous meeting was held on Sept. 17.

The State Council on Monday stressed that efforts should be made to scrutinize every link, from farm to dinner table, of food processing, so as to "restore the reputation of the nation's food industry, enhance consumer confidence and ensure public health."

The government underscored the principles of the scrutiny: to put the people first, ensure safety, prescribe responsibilities clearly, intensify supervision, monitor the whole process, realize information disclosure, improve institutional systems and criteria and ensure accountability.

Follow-up work should be done properly. Free examinations and medical treatment should continue to be provided for infants at risk from the problematic milk powder, with examinations and hospitalization to be enhanced in rural and remote areas.

Those responsible for the contamination, including producers, traders and officials, should be penalized in accordance with laws and regulations, the State Council said.

The normal order of the domestic dairy market should be restored, with the suspension of production at enterprises that recorded poor product quality and imperfect quality guarantee systems. Milk collecting stations should be overhauled, and the threshold for the milk market should be raised. Quality criteria for the wider food industry should be improved.

Meanwhile, dairy farmers in major areas should be supported financially.

The meeting approved draft regulations on quality control for dairy products. The regulations stipulated stricter and detailed rules on animal husbandry, fresh milk collection, dairy production, domestic sales and import and export of dairy products.

The Sanlu Group, a leading dairy producer based in northern Hebei Province, admitted on Sept. 12 that it had found some of its baby milk powder products were contaminated with melamine.

Contaminated baby formula has killed at least three infants and left more than 53,000 with urinary tract problems, including kidney stones. About 13,000 infants are still being treated in hospitals.

The General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) had sent more than 5,000 inspectors to carry out round-the-clock scrutiny at dairy factories to restore consumer confidence in the wake of the tainted milk scandal.

Wang Yong, AQSIQ chief, told Xinhua that the government would strive to ensure all dairy products manufactured after Sept. 14 were melamine-free and safe.

Quality sample checks have been conducted on the products of other major brands including Mengniu, Yili, Bright Dairy and Sanyuan.

The administration said on Sunday that latest tests on dairy products nationwide had found no traces of melamine.

A total of 437 food quality inspection institutions across the country had been certified by Sunday to conduct testing of melamine, the industrial chemical used to cheat on protein tests of diluted raw milk, according to the AQSIQ.

The Ministry of Health has dispatched more than 1,600 medical teams, involving more than 8,000 people, to deal with the problem. More than 4,500 medical institutions nationwide have helped with medical tests.

(Xinhua News Agency October 7, 2008)