Sanlu Milk Crisis Essay

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There were many reasons why the Sanlu milk crisis occurred. Between 2000 and 2007, China’s dairy consumption increased an average of 23% per year. This large increase put pressure on the dairy industry, which was having difficult time meeting consumer demand. The shortage of raw dairy product prompted many companies to source from dairy farmers without properly conducting due diligence and fully vetting their operations. Also, the cost structure of the dairy industry and lack of government regulations incentivized dairy farmers to dilute their milk so they could sell more of their product. The dairy industry adopted a crude protein test as a quality control measure; however, many dairy farmers were able to cheat this test by
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This incentivized the dairy farmers to find ways to stretch their product further and increase margins. Dairy farmers must be properly compensated for their product if the quality of the milk is to be maintained.
The dairy industry must also do a better job at ensuring the quality of the product it receives from its milk providers. Obviously the dairy farmers found a way to get around the protein test. The dairy companies should instead follow the lead of their French and Australian counterparts and conduct a true protein test prior to payment. This would eliminate the ability of the dairy farmers to cheat the test as they had in the past.
The government also has a responsibility to fix this issue the dairy industry is facing. The government failed to adequately monitor the quality of the milk being sold by dairy companies. The Chinese government knew as early as 2004 that there was an issue with the milk supply when the “big head disease” occurred yet there was little government action to determine the scope of this problem. The government should have regulations the dairy industry must meet to protect its citizens, similar to what is prevalent in developed countries today.

In order to regain consumer confidence and prevent another dairy crisis from occurring, there are many issues the dairy industry along with the Chinese government need to resolve. Key to ensuring this crisis does not occur in the future is
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