November 12, 2014

China Modern Dairy, China’s largest dairy operator with a dairy herd of 190,000 head and which produced 463,991 tons of milk in the first half of 2014, is being investigated by the Chinese government after claims it sold cows infected with tuberculosis, and in some cases brucellosis as well. The investigation began following reports that a China Modern Dairy subsidiary, Modern Farming Baoji, sold 94 cows at auction, of which cows tested positive for tuberculosis, with some testing positive for brucellosis too. This marks the second negative press for the dairy group after the China Business Journal reported that the company has also been fined for illegally dumping animal waste into fish ponds. Given Chinese consumer’s sensitivity to food safety and quality scandals, despite denying the accusations, shares of the dairy group plunged 13% at one point to their lowest since September 2013 before recovering somewhat to stand at 8.5% down – wiping out US$160 million from the group’s stock market value.

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