Dirty Oil in the Gears

By Lan Xinzhen

Dirty Oil in the Gears

By Lan Xinzhen

The government must do more to strengthen food and drug security

Chinese like deep-fried food, and they also like stir-fried meat and vegetables. Oil is an indispensable part of Chinese cuisine, and China is the world’s biggest consumer of edible oil.

There is also a large amount of oil found in kitchen refuse across the country, which is extracted and sold back on the market. “Recycled cooking oil,” as it is known, is processed into soaps or biodiesel for industrial purpose.

This should have been conducive to environmental protection because it is recycling of wastes. However, some lawless persons reprocessed such oil and sell it to restaurants as cooking oil.

The dirty oil is believed to destroy white blood cells and the mucous membrane of the alimentary tract, causing food poisoning or even cancer.

Repurposed gutter oil has seriously undermined government efforts to strengthen food sanitation and safety and has drawn the attention of public security department. Police have already launched a crackdown on illegally reprocessed cooking oil. On September 13, 2011, the Ministry of Public Security, in command of some local public security departments, cracked the country’s first case of producing edible oil with illegally reprocessed cooking oil, arresting 32 suspects who had allegedly produced gutter oil and sold it to restaurants in a number of provinces.

More than 100 tons of the oil was seized after police busted a criminal network spanning 14 provinces. Six illegal factories and two gutter oil production lines were demolished.

Those who produce edible oil from illegally reprocessed cooking oil will be charged for production of toxic or harmful foodstuff, and those who sell “edible oil” made of illegally reprocessed cooking oil will be charged for sale of toxic or harmful foodstuff.

On August 28, Ningbo Intermediate People’s Court held hearings on the frst case of illegally processing and selling gutter oil. However, the public found things are not as simple as a case of selling gutter oil as edible oil, because gutter oil has also been used as edible oil.

Many companies involved

According to the prosecutor of the Ningbo People’s Procuratorate, Jinan Green Bio Oil Co. in Shandong Province produced gutter oil with recycled waste cooking oil, and Huikang Oil in Henan Province blended gutter oil purchased from the former with edible soybean oil and resold it to food and fodder makers and a pharmaceutical material company.

Huikang Oil’s biggest client was Joincare Biotechnological Co. Ltd. in Jiaozuo, Henan Province, responsible for 50 percent of Huikang’s sales volume. Joincare Biotechnological Co. Ltd. is a wholly owned subsidiary of the Shanghai-listed Joincare Pharmaceutical Group Industry Co. Ltd. An ingredient made of gutter oil by Joincare has also been used in antibiotics.

The public has called on related government authorities to explain whether medicine composed of gutter oil is harmful and to publicize the list of 62 pharmaceutical companies involved in the gutter oil scandal.

The State Food and Drug Administration (SFDA) said on its website that it had launched an investigation and had called on pharmaceutical companies to strictly check the quality of raw materials, audit raw material suppliers and stop the use of disqualified chemical materials. The Jiaozuo Municipal Government has also organized four investigative groups to look into Joincare’s practices, with the participation of several departments involved in quality supervision, industrial and commercial administration and drug administration.

MANAGING DIRTY OIL: Workers at a waste disposal company in Shanghai collect gutter oil. Obstacles remain in preventing restaurants from using repurposed oil

Currently, the investigations have not reached any conclusions. The SFDA said itis organizing experts to review foreign and domestic documents, assess the influence of soybean oil quality on cephalosporin antibiotics and study foreign methods for utilizing recycled oil.

The SFDA said the administration needs some time to invite authoritative institutions and experts to make the assessment. Once a conclusion is reached, it will inform the public.

Prosecutors said from early 2010 to July 2011, Huikang Oil sold 16,200 tons of gutter oil to Joincare, earning 145 million yuan ($22.87 million). The average price was 8,950 yuan ($1,411.67) per ton, much lower than the normal price of soybean oil, and even lower than the average price of oil sold by Huikang to food and fodder makers.

Joincare’s purchase of gutter oil stems from its desire to cut production costs. Figures from the company showed that in 2010 it completed sales revenue of 941 million yuan ($148.42 million), earning net profits of 339 million yuan ($53.47 million). Its parent company Joincare Pharmaceutical Group Industry Co. Ltd. pulled in sales revenue of 4.47 billion yuan ($705.05 million) and its net profits reached 740 million yuan ($116.72 million). Nearly half of the parent company’s net profits came from Joincare Biotechnological Co. Ltd.

Chinese police launched a crackdown on the illegal production and sale of gutter oil. After July 2011, Joincare abandoned the purchase of gutter oil. That year, with its sales revenue declining to 698 million yuan ($110.09 million), the company suffered losses of 43 million yuan ($6.78 million). Joincare attributed the losses to the price drop of its major product, 7-aminocephalosporanic acid (7-ACA), a key chemical component of cephalosporin antibiotics, to its lowest in 10 years and the decline of the product’s proft rate to 5.18 percent. However, the company did not mention the impact on production costs after abandoning the purchase of gutter oil.

In the first half of this year, Joincare, which had claimed to only use soybean oil, realized sales revenue of 229 million yuan ($36.12 million), a decline of 53 percent from a year ago, and suffered losses of 51 million yuan ($8.04 million).

According to an announcement by Joincare Pharmaceutical, 7-ACA production line is regarded as an important profit contributor to its subsidiary Joincare Biotechnological. Involvement in the gutter oil scandal posed problems in the sale of 7-ACA. The gutter oil scandal has limited Joincare Pharmaceutical’s profits, and the company’s future looks bleak.

On September 5, Shenzhen-listed Beijing Dabeinong Technology Group Co. Ltd. issued an announcement admitting that two of its subsidiaries in Zhengzhou and Xinxiang of Henan Province once purchased soybean oil from Huikang Oil. In the ensuing days, other listed companies, such as Tangrenshen Group Co. Ltd., Henan Huaying Agricultural Development Co. Ltd. and Hunan Zhenghong Science and Technology Development Co. Ltd., admitted buying soybean oil from Huikang.

A foreign-invested company—Chia Tai Group—is also involved in the scandal. Prosecutors said its subsidiaries in Shanxi and Hubei provinces are suspected to have purchased soybean oil blended with gutter oil.

Hard to supervise

After media reports revealed Joincare Biotechnological Co. Ltd.’s role in the gutter oil scandal, Joincare Pharmaceutical Co. Ltd. suspended its stock transactions the following day. In a statement, the company said that it would work to avoid fostering relations with suppliers that use gutter oil.

Joincare added that gutter oil often cannot be detected. “We checked all the soybean oil we had purchased with eight indicators, while the national standards require only four indicators,” said Qiu Qingfeng, board secretary of Joincare. “But we still failed to detect the inferior ingredients in the oil.”

Qiu said Joincare isn’t to blame. Last year the Ministry of Public Health received 315 tips from institutions and the public on detecting gutter oil but has yet to come up with a uniform method for doing so.

Police discovered the production of gutter oil after nearby residents complained of a strong odor from a plant in Shandong Province. Police found a large amount of swill and many buckets of blended oil from the plant. Since the person in charge could not provide any documents of purchasing these materials, the plant was suspected to produce gutter oil.

The police once sent 10 samples of oil seized from the plant for testing. Compared with normal soybean oil, only two samples were found disqualifed for a few indicators.

The State Administration for Industry and Commerce and the State Administration of Quality Supervision, Inspection and Quarantine are responsible for ensuring product quality, but limited technology makes it diffcult to uncover gutter oil in fnished products.

Luo Yunbo, Dean of the College of Food Science and Nutritional Engineering of China Agricultural University, believes China should learn from the practices in Western countries, where governments carry out strict supervision on the use of recycled cooking oil.

In the 1960s, Japan was also known to use gutter oil. To solve the problem, the Japanese Government stipulated that companies would extract used oil from refuse and sell it to the government at steep prices. The government would then use the oil as fuel for its garbage trucks.

In the United States, cooking oil waste is recycled by companies licensed by public health and environment protection departments. Those companies are equipped with special facilities for transportation, recycling and processing. If restaurants sell waste oil to individuals or institutions without their knowledge, they could be forced to shut down.

In Beijing alone, 600,000 tons of cooking oil is consumed each year, leaving 90,000 tons of waste oil. Among the leftover oil, 60,000-70,000 tons can be effectively collected. There are only two bio-diesel refneries in Beijing, with an annual production capacity of less than 10,000 tons, leaving whereabouts of the remaining tens of thousands of tons unknown.

lanxinzhen@bjreview.com