Supply Issues in China's Milk Adulteration Incident

Agricultural Economists’ Conference, August 2009

23 Pages Posted: 13 Jan 2011

See all articles by H. Frederick Gale

H. Frederick Gale

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Dinghuan Hu

Chinese Academy of Social Sciences (CASS) - Institute of Agricultural Economics

Date Written: August 2009

Abstract

China’s melamine milk adulteration crisis highlights the challenges that arise as large well capitalized companies procure raw materials from a diffused supply chain of scattered small farmers and milk collection stations. As milk prices climbed sharply in 2007 and companies branched out into new territories, intense competition for raw milk supplies strengthened incentives to water down and adulterate milk. Effective food safety measures must account for incentives, the distribution of market power in the supply chain and market dynamics.

Keywords: food safety, dairy, China, melamine, market structure, supply chain

JEL Classification: Q13

Suggested Citation

Gale, H. Frederick and Hu, Dinghuan, Supply Issues in China's Milk Adulteration Incident (August 2009). Agricultural Economists’ Conference, August 2009, Available at SSRN: https://ssrn.com/abstract=1739143

H. Frederick Gale (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5215 (Phone)

Dinghuan Hu

Chinese Academy of Social Sciences (CASS) - Institute of Agricultural Economics

No. 30 Baishi QialLu
HaiDian District, Beijing, 1000
China

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