Monday, January 27, 2014

Detailed Rules for Infant Formula Processor Approval in 2013 Released

According to Dairy Products China News issued by CCM in January 2014, on 25 December, the China Food and Drug Administration (CFDA) held a press conference attended by a range of media and industry personnel from processors such as Mengniu, Dumex and NestlĂ©. The event saw it announce the release of the Detailed Rules for Infant Formula Processor Approval in 2013 (the Rules) and outline its review of processors’ production licenses.

The Rules were finalised after soliciting opinions from the dairy industry and the public in August last year. They set new requirements for infant formula producers in nine aspects, including purchasing of raw materials, infant formula inspection, manufacturing processes and product traceability.

Compared with the initial draft, the final version saw some specific stipulations added. For example, infant formula are divided into 3 stages to avoid confusion: 1st stage for infants from 0-6 months; 2nd stage for 6 months to 1 year old; and 3rd stage for 1-3 years old. Moreover, it requires that production of infant formula with dry and wet mixing processes should be completed at a single site. Most of the main factories in China are wet-blending, however some processors produce a base formula at a plant in the North by wet process, and then transport the base product to another factory in the South where additional nutrients are added by dry process – this practice will be forbidden.

Mr. Ma Chunliang, an official at the CFDA, explained the stipulations with regard to imported infant formula in the press conference, the area where the public is most concerned. For example, he explained that production of infant formula through dry process or wet process with imported base powder is allowed, but that importing the base powder and then simply adding a few ingredients or sub-packaging are not permitted.

In order to urge all the processors to implement these Rules, the CFDA issued a notice on 24 December indicating that it will review all infant formula processors’ production licenses; the following aspects are notable:
 The review must be completed by 31 May 2014, otherwise the processors will have to halt production and will be offered a 2 years transition period to rectify their production processes
 Processors who pass the review should send the products’ formulations along with samples of packaging and labels to the provincial CFDA offices to be kept on file; those who want to change formulations, or product names, packaging, labels etc should comply with the requirements for 1st/2nd/3rd stages (for 1st stage formula, demineralised whey powder’s ash content must be ≤15% and WPC ash content ≤5.5%), and will be offered a 1 year transition period to rectify processes as required
 Processors whose base powder and infant formula production are in different factories will be offered a 3 years’ transition period for rectification

Mr. Teng Jiacai, Deputy Director of the CFDA, said that the infant formula processors who want to exit this sector can diversify into other products and will get support from the government to do so. As a next step the Ministry of Industry and Information Technology and other authorities will issue a policy to support the development of infant formula industry and those companies seeking to diversify in this way.

The Rules involve stricter standards for domestic infant formula production, taking production standards in the pharmaceutical sector as a reference point, in order to guarantee better safety and quality. They also require processors to take primary responsibility for quality problems, to strengthen inspection of raw materials, to review their suppliers and to set up records systems to monitor and control every step of the production process, as the potential Fonterra food incident last year underlined the risks which could theoretically be caused by upstream suppliers.

As the standards for the industry are raised, processors will be under great pressure and some small and mid-sized processors may be eliminated, but the changes seem beneficial for the industry’s long term development and the Rules are unlikely to disturb the supply and pricing of infant formula in China. They constituted the 3rd announcement made by the CFDA about infant formula in December, but many consumers will still doubt whether the quality of domestic products is as good as imported products – this concept is so ingrained will take a long time to change.

Table of Contents of Dairy Products China News 1401:
Guangzhou Cancels School Milk Guide Price
Biostime Acquisition Brings Local Production Capability
Government Focuses on Infant Formula Safety
Import Tariff Cut for Infant Formula
China Tightens Supervision on Infant Formula Sales
Government Concerns over Milk Safety and Quality
Detailed Rules for Infant Formula Processor Approval in 2013 Released
Rebornne Focuses on E-commerce
Fonterra’s Challenge in China’s Dairy Market
Ausnutria’s Profitability Challenged
Milk Price Rises in Heilongjiang
Abbott’s Similac Launched Online

Dairy Products China News, a monthly publication issued by CCM on 15th, offers you the latest information on new market dynamics, company development, new products, technology, packaging and raw material supply, etc. It also focuses on the government’s direction and polices, helping you get the whole picture of the industry.

About CCM
CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals, CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis, and Consultancy Service. 

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