How toxic chemical melamine got into China's food supply

SHIJIAZHUANG, China — Xue Jianzhong never posted a sign on his ground-floor shop, but somehow everyone knew what he was selling. Customers from all over this dairy-farming region in the northeastern province of Hebei flocked to Xue's dusty street to buy special concoctions that he said would make milk more nutritious — and more marketable.

Advertised as a "protein powder," the substance was sold in 44-pound bags and was tasteless, odorless and white, like talc. It wasn't cheap, about $1 a pound, but it could be mixed into inferior milk or even with specially treated water and the result would be a milklike liquid that would pass government quality tests.

It wasn't until September, when Xue was arrested in connection with the investigation into the poisoning of tens of thousands of babies across China, that it became clear his secret ingredient was a toxic industrial chemical called melamine.

Melamine can mimic protein in nutrition tests for milk and in products such as wheat gluten and chicken feed. But when ingested in large amounts, it can cause kidney stones or death in children and animals.

The problem is not just a domestic one. Melamine has surfaced in foods sold across Asia and, earlier, in pet food that poisoned animals in the United States, tainting China's reputation as the world's factory.

How the same substance that had killed pets and was officially banned in China as an additive in food just last year wound up in baby formula and so many other food products is a story of desperate farmers, complicit chemical companies, and government officials who looked the other way. All were part of a system that allowed the network of melamine dealers to thrive.

Farmers and companies involved in food and feed production said the doctoring of their products was an open secret in the countryside but that the salesmen had told them it was harmless.

"Actually, every milk-collection center bought a lot of melamine," said Wang, a 60-year-old farmer in the village of Yudi, in the Shijiazhuang area, who would not give her full name because she feared retribution. "Everybody did this."

China's melamine trade is run by a criminal syndicate that has relied on chemical companies and underground laboratories for its supply. The trade has been supported by a customer base so eager for the substance that for years it turned a blind eye to its potentially deadly effects. Traditionally used in the manufacture of plastics and leather, melamine has made its way into the food supply in a way that was never supposed to happen.

Initially covered up by officials afraid of losing their jobs and besmirching the Beijing Olympic Games, the melamine-contamination scandal began with infant-milk formula that killed at least four infants and sickened 54,000 babies. It soon spread to candy, instant coffee, yogurt, biscuits and other products made with Chinese milk, prompting bans or recalls in 16 countries.

In recent weeks, the toxin has been discovered in eggs and in animal feed, sparking fears that tainted foods go well beyond dairy products and may include fish, shrimp, beef and poultry.

"Almost all the animal-feed companies I know added protein powder to their product until this September. So did our factory," said a sales manager surnamed Li, in a branch factory of the Liuhe Group, a large animal-feed company in Shandong province. "Of course, no one dares to add it now."

The problem of melamine was supposed to have been fixed long ago.

When Chinese authorities discovered in the summer of 2007 that the chemical was behind the poisoning of thousands of cats and dogs in the United States, it was explicitly banned from both food and feed. Melamine is now considered a controlled substance in China, and its production and use are supposed to be strictly supervised by the government.

The government has bragged about its efforts to overhaul its regulatory system, shutter tens of thousands of factories and step up inspections. But it is clear that loopholes remain.

Xue's shop is in Xingtang county, just 30 miles north of the Shijiazhuang headquarters of the Sanlu Group, the dairy company whose milk powder is at the center of the widening scandal.

Xue, who pocketed $150 for every ton of powder he sold, was part of a semiprofessional business that operated like any other startup, according to farmers and other potential customers who were solicited by melamine dealers.

There were legitimate-looking stores, representatives at milk-collection centers and even door-to-door salesmen. Customers with questions about how to use the melamine knew that technical assistance was just a phone call away.

Until recently, the salesmen would come every few months to Guo Junfeng's dairy farm in Shanxi province. "Even if you don't have milk, mix this substance with water and you will have something that is just like milk!" Guo remembers one of them telling him.

The salesmen were hawking two grades of the powder. The first contained whey protein, which can be collected from cheese made from cow's milk. That was the cheaper type and cost about $44 a bag, but it didn't always work perfectly. The second kind, which cost roughly $118 a bag, was more mysterious.

The bag had some English writing on it that Guo could not decipher. The vendors said they couldn't read the letters either, and they could not explain what exactly was in the mix. But they said you could use the powder to create milk from any liquid.

Many of Guo's fellow farmers in the province were dazzled by the idea of increasing their profits as much as 300 percent, he said.

But Guo said he knew it was too good to be true. "I'm usually a very suspicious person," he said. "They said it was nothing dangerous, but I couldn't be sure."

Dairy-industry analysts who have inspected the melamine powder said it appeared to have been created by sophisticated chemical technicians. Qiao Fuming, a dairy consultant in Beijing, said it is impossible to take raw melamine and mix it with milk because it won't dissolve. The melamine had to be converted into a form that could be mixed with liquids, he said.

Wu Jianping, a salesman at the Lixia chemical factory in Shandong province, said it was clear that some of his company's customers were not in industries that traditionally use melamine.

But, he added: "We never ask what they use melamine for. If we ask, they say, 'You don't need to ask. You want to sell it. We want to buy it. That's all you need to know.' "

Researchers Zhang Jie, Liu Songjie and Liu Liu in Beijing and Crissie Ding in Shanghai contributed to this report.