Beijing, Sept 25 - Several Chinese provinces said they will subsidise dairy farmers after a scandal involving toxic milk caused consumption to fall off sharply and led farmers to dump milk, the agriculture ministry said on Thursday.
The ministry said in an urgent notice that farmers in some regions, including Hebei, Shanxi, Inner Mongolia and Shandong, have dumped large amounts of milk over past days after an industrial chemical, melamine, was found in a range of dairy products, including liquid milk and baby milk powder.
China said it has stepped up testing for melamine in dairy products after more than 54,000 infants were treated for kidney and other ailments and at least four infants died.
Besides tainted baby formula produced by more than 20 companies, initial tests showed that 10 percent of milk and liquid yoghurt from three major dairies contained melamine, an industrial chemical used to make plastics.
Government and industry officials have said melamine -- which has no nutritional value but boosts protein ratings in tests -- was added to livestock feed, milk powder and other products at various stages of the production process as a cheap way to stretch output and boost profits.
Several government regulatory officials and milk company executives have been dismissed, but so far no one has been detained or accused of actually adding melamine to dairy products.
Even so, China's quality control agency said on Wednesday that recently tested milk showed no traces of melamine.
The agriculture ministry said on Thursday it is urging dairy plants to honour their contracts with farmers and continue to collect fresh milk from farmers.
"The large amount of dumping has caused heavy losses to dairy farmers and will hurt badly the sound development of the dairy industry," the ministry said.
Hebei province has earmarked 316 million yuan ($46.31 million) to be distributed to dairy farmers. Farmers and dairy plants in the province were the worst hit after tainted baby milk powder from the Hebei-based Sanlu Group was first disclosed.
Under the subsidy plan, farmers will receive 200 yuan (about $29) in feed subsidy for each cow they own, a move aimed at encouraging farmers to stay in the milk producing business. Diary plants are also being subsidised to process milk powder for farmers, said Xinhua.
Shanxi would grant dairy farmers a subsidy between 10 and 18 yuan per day for each cow, while Liaoning in northeast allocated 108 million yuan as subsidies for its 240,000 cows, it said.
($1=6.824 Yuan)