Economics Blog - Milk Powder: Nutritious Calcium or Lethal Poison?

http://www.economist.com/business/displaystory.cfm?story_id=12304845

Summary
Milk produced by China’s Sanlu Dairy Farm, has been found to be lethal to humans. Four children are dead, 53,000 others have been taken ill, and the numbers keep rising. What is the cause of this dilemma? Melamine, an industrial chemical, appears to have been added to milk products, including milk power and fresh milk. Currently, the list has been expanding to include yogurt, cake and even China’s favorite brand of chocolate cookies. The Chinese Government is trying to intervene by hiring inspectors to enforce the quality of toxic chemical inspections. Astonishingly, inspectors have found melamine in milk powder produced in one out of every five suppliers. The chairwoman of Sanlu has been detained. In addition, four milk dealers have been arrested and 22 others are being held for questioning. Nevertheless, foreign countries, including those of Europe and Africa, have banned the import of Chinese dairy products. The damage to China’s economy has been done.

Connections
Healthy milk in China is becoming increasingly scarce. Parents, who fear for their children’s health, now only buy milk products imported from companies of foreign countries. The high demand for foreign milk products, as well as the scarce supply that is available to consumers, has caused the prices of foreign milk products in China to skyrocket. Accordingly, given their limited financial resources, parents now have to forfeit buying clothes, toys and other daily necessities for their children, not to mention forfeiting educational funds and the like. Moreover, parents cannot use the extra money in investements. That is to say, the opportunity cost in relation to obtaining healthy milk for their children has been soaring.

Reflection
This incident is an embarrassing failure for China's product safety system. Considering the fact that a similar incident had already occurred in 2004, it may seem that a pattern is emerging. The laws the Chinese Government has set in place does not seem to be the crux of the problem, rather it is the fact that these laws are not duly observed and strictly upheld. A solution to this crisis must be found. Otherwise, the parents will have to continue to suffer a high opportunity cost for the health of their children.