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Crisis Over Pet Food Extracting Healthy Cost
At the heart of all these dynamics, legal and marketing experts say, is that great lubricator of commerce, trust. It is a commodity American buyers have extended to China in return for significant cost savings but, in retrospect, with little testing and documentation to back it up.
At ChemNutra, company spokesman Steve Stern said, "we ordered food-grade gluten and the invoice said 'food grade,' but what we got was feed grade."
Food-grade gluten must be at least 75 percent protein, a level that the gluten ChemNutra bought from China did not contain. It tested that high, though, because it was spiked with the chemical melamine, which gives falsely elevated protein readings. Given the Chinese supplier's food-grade assurances, and a certificate saying the company was complying with U.S. regulations, ChemNutra had no reason to worry, Stern said.
No such mix-ups or contamination events have plagued U.S. producers of wheat gluten, Pickman said. But domestic producers have been unable to match the rock-bottom prices that the Chinese offer. The going price of about 60 cents a pound, he said, is 20 to 30 percent lower than the cost of production in the United States, where 540 million pounds of the stuff are bought every year -- 70 percent of it from foreign sources.
Some business people are now saying that such low prices, and the lack of regulatory oversight in China, should alert potential buyers to potential trouble.
"If you want to import from China you need to go to the factory," said Paul Splitek, vice president of mass retail for Boston Warehouse Trading, which imports candy, chocolates and ceramics for companies such as Crate & Barrel and Pottery Barn. "If you don't, you are dumb and acting irresponsibly," said Splitek, who estimates that 60 percent of food factories in China have reliable safety, labeling and documentation practices.
But NutraChem's Miller did visit his suppliers regularly, Stern said. Short of full-time surveillance, he and others said, it is impossible to guarantee that a supplier is not pulling an occasional fast one.
The melamine scandal has angered some in China as well as in the United States.
Richard Zhang, an import-export sales manager for Qingyuan Foodstuff, which sells corn gluten and other feeds in Shandong Province, said his company does not use additives such as melamine in its products, but that some smaller competitors started doing so a few years ago. Because of their conduct, he said, the Chinese government is demanding that all vegetable protein exporters send their products to Beijing for central testing first.
That means the misbehavior of a few firms has delayed shipments for everyone by up to two weeks.
"We really hate them," Zhang said of the companies that were cheating. "They have destroyed the credibility of the whole industry."
Premium pet food brands also stand to take a hit from the loss of trust.