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Hanwei Group, owned by Han Wei, a Forbes China rich-listed entrepreneur, may be seriously hurt by the melamine scandal that will not go away. Tests carried out by the Center for Food Safety in Hong Kong have found eggs produced by the company on the mainland and sold in the city to be contaminated with the chemical. An industry insider said that before the Hong Kong testing, Hanwei’s eggs shipped to Japan and Korea had been found to contain melamine and banned from entering both countries.
Hanwei Group now owns China’s biggest laying chicken farmer and organic fertilizer manufacturing plant, Asia’s biggest egg powder processing plant, and the world’s largest abalone breeding base. Its main product "Gegeda" organic eggs have been sold in over 100 big and medium Chinese cities as well as overseas countries and regions such as Japan, Southeast Asia, and Hong Kong.
The melamine in the eggs is probably a residue from feed. There two kinds of laying chicken feedstuff, one being energy feed, mainly consisting of corn, and the other being protein feed, consisting mainly of soybean cake.
As for why feedstuff might contain melamine, Feng Maoxi, secretary general of the Shanghai Feed Trade Association, explained that some chicken breeding enterprises have high protein content requirements for their feed. Higher protein content brings a higher price, so a feed producer might illegally add melamine into the product, as the chemical is recognized as protein by most current testing equipment. Feng Maoxi said since the scandal of melamine-tainted pet food exported to the US, relevant departments have reinforced supervision over the production of feedstuff. Now no feed producers in Shanghai have been found to be adding melamine into feedstuff, but the situation is not clear in other regions.
Beijing DQY Agricultural Technology Co., China’s biggest branded egg producer, now lacks all confidence in the feed industry and has chosen to produce its own chicken feed to feed the its layers. Company market supervisor Yu Yang said the quality of chicken feed can be guaranteed if it is produced in an hermetic environment controlled by computers.
Some analysts speculate that Hanwei’s tainted eggs were sourced from the market, and were not actually produced by the company itself. Each egg on the market costs about 0.3 yuan, while each Hanwei Group egg goes for about 0.7 yuan due to the high cost of their chicken feed. It is thought that maybe eggs the company sourced from the market don’t meet the quality standards.
Hanwei said to the media at the end of 2007 that tomorrow’s egg product industry would be just like today’s dairy industry. According to Hanwei, the dairy industry spent six years to increase its sales from millions to over ten trillion yuan, but the egg product industry would need only three to five years to accomplish the same feat. By 2010, Hanwei Group’s penned egg-layers for "Gegeda" egg had been expected to reach ten million, with an annual egg production of 200,000 tons and a scale of production among the world’s top three. But the outbreak of the melamine scandal will certainly have smashed Hanwei’s golden dream.Â
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"We can't deduce that eggs from other companies also have problems because of the problem in Hanwei Group, for that might cause unnecessary panic. Once people dare not eat eggs, the whole industry would be destroyed," said Gong Guifen, vice-secretary general of the Poultry Branch of the China Animal Agriculture Association. 　
Crisis in China’s Feed Industry
A Mr. Wang, general manager of a joint venture feed manufacturing company, said to China Business News that melamine now found in food was all from outside. When chickens constantly eat feed with melamine, melamine will accumulate in them, and end up in their eggs.
Mr. Wang said since protein content was an important indicator in chicken feed tests, some feed suppliers might illegally add melamine into feed to fake high protein content.
"Chicken feed can be divided into two types: broiler feed and layer feed. The difference is that protein content of broiler feed is higher," said Mr. Wang. If producers require higher protein content in their feed, feed makers may add melamine into it. Raw materials for chicken feed include soybean cake, cottonseed cake, rapeseed cake, and grease. To find the source of melamine, feed companies will need to test all raw materials. "Testing for melamine content is complicated, and very few institutions have the ability. It is very hard for feed companies to test for melamine content themselves."
"It’s not a secret in the feed industry to add melamine into feed," said Wang Dingmian, executive director of the Diary Association of China.
According to Wang, two reasons most probably account for the melamine in eggs. Feed producers may add melamine directly into chicken feed, or the feed may contain overdue milk powder with high level of melamine content. "Either can lead to melamine residue in eggs.
"Many illegal additives, appearing as "new technology," have brought an unprecedented crisis over quality to China’s feed processing industry," said an expert of a national research institution to China Business News.
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