Beijing, Oct 9 - China will offer a 300 million yuan ($44.03 million) to dairy farmers hard-hit by a crisis of confidence among consumers, after it was revealed that many milk products contained the chemical melamine.
The subsidy will "stabilise the dairy industry and promote the healthy development of dairy products", the Finance and Agriculture Ministries said in a joint statement on Thursday.
Melamine added to milk powder to raise the apparent protein level has made tens of thousands of infants sick and killed four. It has also been found in fresh milk, yoghurt, and even candy over the last month, leading consumers to avoid milk products and other countries to ban Chinese milk products.
Even before the melamine scandal, agricultural officials had been concerned that massive purchases of dairy cows by inexperienced farmers, combined with inadequate refrigeration and distribution systems, could lead to a glut of poor quality milk and poor returns for the farmers.
Last summer, some dairy farmers faced such bad losses on milk production that they slaughtered their herds to sell the meat.
Officials feared at the time that if farmers exited the dairy sector en masse, a milk shortage could develop and prices could spike, just as had occured in the pork industry. The current crisis supports that fear.
Farmers in the northern and central provinces of Inner Mongolia, Hebei, Liaoning, Shanxi, Shandong and Henan would be eligible for the subsidy, the statement said. It called for direct monitoring of the distribution of the subsidy to households.