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IN DEPTH
Capital Flows Into Private Equity Funds Franchising Outgrows Fast Food Phase
Gas Shift Stuck In The Pipeline Milk Sales Dry Up After Health Scare
Public Mills Protest Flour Tenders

BY AMENA BAKR

Milk demand has dropped off on rumors that some producers are adding toxic chemicals to their watered-down milk to increase its volume. The health scare appears to have started after state newspaper Al-Ahram published a series of sensationalist articles alleging that dairies were adding ceramic powder to their watered-down milk to thicken it and give it a whiter appearance. The articles also reported that seven dairies were ordered shut down after health inspectors found the milk they supplied was unfit for human consumption.

The articles’ allegations resonated with consumers. Sales of loose milk (unpasteurized fresh milk), which account for 80 percent of the market, have dropped off sharply, while sales of UHT packaged milk are down 20 percent. “I stopped buying milk after I heard that this [ceramic] powder could poison my children,” says Sayeda El Araby, a 29-year-old housewife and mother of two.

Milk producers say the articles irresponsibly gave the impression that a few isolated incidents were indicators of the industry at large. “The articles published in Al-Ahram were very generalized and created an unnecessary scare among people, which made them stop buying milk altogether,” says Amm Saied, owner of a small dairy store in downtown Cairo.

It was later revealed that the journalist who wrote the articles was only reporting on the alleged practices of a handful of small dairies in Sharqiya governorate that supply loose milk to the local community. Moreover, the companies Al-Ahram reported had been shut down due to health code violations were in fact closed in 2003 due to incidents entirely unrelated to the current allegations – a point not made clear in the articles.

In any case, experts have shown the articles’ claims that ceramic powder is being added to milk to be highly unlikely. “Ceramic powder is made of silica, which does not dissolve in water, and milk is 90 percent water, so these claims are ridiculous,” Barsoum Nashed, a chemistry professor at Cairo University, told Business Monthly. “I tested this myself in the lab when I heard about the problem and I can assure you that even acid cannot dissolve this ceramic mixture.”

While health officials have ruled out contamination with ceramic powder, they do admit that additives are sometimes used to increase the volume of milk – though nothing that poses a health risk. “The most widely used additive to cheat consumers is water,” says Dr. Abdel Azim Bayoumy, general director of the Food Safety Department at the Ministry of Health & Population (MOHP), who says 15 to 25 percent of the 3,000 milk samples inspected at ministry labs in 2006 showed signs of being watered down by dairy producers. Less than 5 percent of samples revealed the addition of natural additives such as vegetable fats, gelatin or sugar. “After adding water to the milk, some producers like to compensate for the diluted fat in the liquid, so they add sugar and samna (clarified butter),” he explains.

There have also been some rare incidents of loose milk producers adding artificial ingredients, admits Bayoumy. “It’s very rare that we find chemicals such as formaline (formaldehyde) and hydrogen peroxide... I’d say we had about seven cases out of 3,000 samples,” he says.

The two chemicals are sometimes used as a preservative, explains Nashed. While neither chemical presents a serious health risk in small quantities, large doses can be toxic, and potentially fatal for children. “Formaline and hydrogen peroxide help preserve the milk for a longer time, but sometimes in the summer time producers add an excessive amount, which is very dangerous.”

Dairy producers caught adding ingredients to their milk are subject to a LE 10,000 fine and one-year prison sentence. But industry analysts charge that there are glaring blind spots in monitoring and enforcement. According to the Federation of Egyptian Industries (FEI), the vast majority of the 2.5 million tons of milk produced by the dairy industry each year is not inspected. “There are 17 inspection units belonging to several ministries, but they are only inspecting 20 percent of the milk products in the market, while the remainder is [never checked],” says Safwan Thabet, head of the Chamber of Food Industries at the FEI and chairman of Juhayna, the country’s largest producer of packaged milk.

Thabet claims inspections are generally limited to medium and large-scale milk producers; smaller operations – including small dairies that supply the traditional milkmen who deliver loose milk door-to-door in almost every district – operate with little or no supervision. “These marginal producers are all over the country and work [in a way] that is very difficult to keep count of,” he says.

Bayoumy, however, insists that even these independent milk producers fall under the watchful eye of government inspectors. He says the Ministry of Health is the primary supervisory body, with 26 labs and 600 inspectors, while the ministries of trade and industry, agriculture, social solidarity and interior each have their own inspection units to perform independent quality control analysis. “It is very normal to have more than one inspection authority, as this is the [standard] worldwide practice,” he says. “Even the US has four [different] inspection units.”

He dismisses Thabet’s claim that thousands of loose milk distributors operate outside the purview of these inspection agencies. “These numbers are nowhere close to the truth because Thabet is only counting the milk producers that are members of the FEI,” he says, adding that the calculation disregards 4,200 registered small and medium enterprises (SMEs) involved in dairy production. “It’s no secret that the success of these SMEs is [to the detriment] of the larger companies, so that’s why they are trying to suppress them and label them as ‘marginal’ producers.”

Thabet laughs off the accusation that packaged milk producers are fighting a battle against the traditional milkman. “Even if we managed to convince 50 percent of the people that are consuming loose milk to switch to packaged milk we wouldn’t have the producing capacity to do so,” he says.

The health scare, however, does play well into the hands of packaged milk producers, who claim their product is more hygienic than loose milk. Packaged milk producers employ ultra-heat treatment (UHT), a process in which milk is heated to 130 C for 2-3 seconds to kill all microbes and then cooled rapidly and packaged in specially-lined, hermetically-sealed cartons. “This process gives the milk a shelf life of six months, but at the same time [UHT milk] does not have the same fatty taste of loose milk,” says Karim El Borollossy, chairman and managing director of Enjoy, which holds a 20-percent share of the packaged milk market. “And we all know that fat and salt are the two ingredients that make food more tasty; that’s why some people still go for loose milk.”

Some producers, such as Domty, Labanita and Isis, have experimented with bottled pasteurized milk, which preserves the fresh milk’s full flavor, but has a limited shelf life. Neils Thomsen, factories director at Juhayna, says the country’s distribution channels pose a serious obstacle to marketing bottled fresh milk, and are the main reason why Juhayna has limited its product line to UHT milk. “We wish we could provide the market with fresh milk, but the problem is not having the efficient transportation and distribution network, which means that the milk will go bad before reaching the supermarket,” he explains.

Loose milk has an even shorter shelf life and, as it is not pasteurized, may contain large quantities of bacteria and viruses. While the internationally accepted average bacteria count for fresh milk is around 250,000 bacteria per cubic centimeter, some samples of loose milk have been found to contain over 2 million bacteria per cubic centimeter. This potential health risk – particularly in the hot summer months – has prompted many countries to ban the sale of loose milk altogether. “Even countries such as Sudan and Yemen don’t allow loose milk to be sold,” Thabet adds.

Despite the obvious health risks, the traditional milkman, who travels the streets by bicycle or donkey with metal jugs of loose milk, appears unlikely to disappear any time soon. “Having the milkman come to our doorstep every morning and then having our mothers boil the milk to get a layer of cream and milk is something that is hard to give up quickly,” admits El Borollossy.

He explains that the problem is not the sale of loose milk per se, but rather the unregulated trade that puts consumers at risk. “Many of the people that are selling loose milk without a license are afraid of starting a registered business. They fear that being exposed to government [monitoring] would work against them, so they choose to operate in the shadows,” says El Borollossy, who believes the government should work to create a business environment that would encourage them to operate legally.

In the meantime, despite the health scare’s effect on sales, packaged milk companies are keeping a low profile until the public’s furor blows over. “For now, I think it’s best for the milk companies to keep their heads low, as we’re still considered to be the enemy,” says Hatem Saleh, managing director of Beyti, a local dairy products firm.

El Borollossy is optimistic that the milk industry will recover quickly, but says the health scare would have been averted altogether if the public – and journalists – were better informed about the nature of milk production. “We want the press to understand the topic they are writing about before scaring people to death,” he says. “And for the time being, drink your glass of milk – just make sure you know it’s from a good source.

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