Melamine in big demand in China as a feed additive

By Niu Shuping and Lucy Hornby

BEIJING (Reuters) - Melamine is so popular as a protein lookalike feed additive that at least one Chinese manufacturer is believed to have torn down buildings to get to leftover scraps, industry officials said on Monday.

Melamine, used in making plastic and fertilizers, was blamed for killing pets in the United States and South America last month after it was found in wheat gluten and rice protein exported from China for use in pet food.

More than 100 brands of pet food were recalled, triggering a round of finger-pointing among pet food suppliers in the U.S. China last week said it would ban melamine-tainted protein products from export and from domestic markets.

Melamine scrap is believed to be commonly mixed in animal feed in China to artificially boost the protein level, especially in soymeal, tricking feedlots and farmers into paying more for feed for chickens and pigs.

"The chemical plant next to us used the melamine scrap as waste for landfill and built houses on it. Then they tore down the buildings to get the scrap once the price rose," said a manager with Tai'an Yongfeng Feedmill Co. Ltd in the coastal province of Shandong.

"It is a very popular business here. I know people have been mixing this since 1991."

CUTTING CORNERS

Shandong is the centre of China's poultry industry, which is undergoing an industrial revolution as a wealthier population

demands more meat and poultry.

The industry has switched away from farmers raising a few chickens in backyards for sale in covered markets, to packed henhouses of thousands of birds that are slaughtered for national distribution.

Thin margins mean the temptation to cut corners is strong, especially for middlemen selling soymeal in bulk to small feedlots.

"For every percent of protein you gain, you can make 55 yuan. So if you can turn 38 percent protein soymeal into 43 percent meal, you can make more than 200 yuan per tonne," said the manager.

"Feed mills usually have poor equipment and they cannot detect the chemical through tests, not even the big mills."

"Fake" soymeal products were widely sold in Hebei and Shandong provinces, the manager said.

"I never heard of this stuff. But in general, chemical products shouldn't be put in animal feed, that's very dangerous," said Xie Hong, executive vice president of Sichuan Southhope Industry Co., China's biggest feed producer and controlling stakeholder in Liuhe Group, the country's largest poultry producer based in Shandong.