Confronting China’s Cadmium-Laced Rice Crisis: Doing nothing about toxic cadmium in rice paddies appears to be no longer an option in Hunan Province

06.05.2013 18:31

Confronting China’s Cadmium-Laced Rice Crisis

Doing nothing about toxic cadmium in rice paddies appears to be no longer an option in Hunan Province

By staff reporters Pang Jiaoming, Gong Jing and Liu Hongqiao

Seller’s stalls are empty and aisles have fallen silent at one of China’s largest wholesale markets for rice, the Lianxi Rice Market in the city of Yiyang, north-central Hunan Province. Business at the market – traditionally a trading center for about 20 percent of all rice grown in Hunan – has come to a standstill in the face of a heavy-metal contamination scare. The scare lay dormant for years before exploding onto the public stage in February with frightening media stories about high levels of the heavy metal cadmium in Hunan-grown rice. Follow-up reports were continuing in June as consumers, wholesalers, retailers and farmers digested results of government lab tests and mulled over reports of entire villages being poisoned over the past decade.In some parts of the country, notably Guangdong Province, Hunan-grown rice has now been banned.

Hunan government officials and some state-run grain traders have tried to keep a lid on the bad news for years. Some officials in recent weeks acknowledged the problem, yet insisted there’s no need for alarm. The province’s state-run media has downplayed the health and environment dangers as well.

Meanwhile, government officials and the media in Guangdong, Hunan’s larger neighbor to the south, have pushed ahead with publicity about cadmium-tainted rice grown in Hunan’s vast paddies. They’re also working to protect public health in step with a State Council directive issued in January, which called for resolving cadmium pollution problems and banning crop production on land with high levels of the toxic metal.

The city of Guangzhou’s Municipal Food and Drug Administration on May 17 said inspections of local restaurant kitchens found unsafe levels of cadmium in 44.4 percent of all rice and rice products. Dangerous amounts of the metal were found in eight of 18 rice samples, the administration said. Rice in six of the tainted samples was grown in Hunan.

A few days later, Guangdong’s Food Safety Office found unhealthy cadmium levels in 31 of 762 batches of grain pulled from inventories at each of the province’s 618 rice production and processing companies. Fourteen batches came from Hunan, four from Guangdong, and the rest from other parts of the country.

Consumers and retailers in the region have reacted by shunning Hunan rice. As a result, it’s now almost impossible to find anywhere in Guangdong, including Guangzhou and the city of Shenzhen, where a local government survey in May found most rice on area tables came from northeastern China or Thailand.

Business owners and employees working for Lainxi’s more than 170 rice wholesalers are now at the center of the crisis, with no clear way out.

“No one wants the goods,” said a worried Peng Youlin, chairman of one Lianxi trader, Yiyang Youlin Rice Co. He spoke with Caixin on May 20. “Most companies right now have shut down or have partially halted production.”

Crisis Harvest

Cadmium is a lustrous, silver-white substance that the U.N. Environmental Program’s website calls “a toxic element for humans, mainly affecting the kidneys and skeleton.” It’s one of several poisonous, heavy metals that officials say has over the years leached from Hunan mines, mine tailings and chemical factories into area waterways, mainly the mighty Xiang River and its tributaries.

Water from contaminated rivers, lakes and streams is typically diverted into the region’s rice paddies, where the metals settle in calm water, tainting soil and crops alike.

A 2011 master’s thesis by Liu Chun, a graduate student at Hebei Agricultural Institute, noted that his tests detected excessive amounts of seven different heavy metals including cadmium in the Xiang. Some 89 percent of the sampled water registered dangerous levels of cadmium, he wrote.

The problem was apparently detected in 2002 by a major Guangdong wholesaler, Shenzhen Cereals Group (SZCG), according to Chen Jian, business manager of the Changsha Grain Depot run by China Grain Reserves Corp., also called Sinograin. He recently told the Nanfang Daily newspaper that SZCG officials’ knowledge of Hunan’s cadmium problem dated to their 2002 cooperation agreement with his company.

For business reasons, Chen said, SZCG chose to ignore the problem for seven years through a stable period for rice prices. But in August 2009, and shortly after newly harvested crops of Hunan rice had filled SZCG warehouses, the market caught wind of the contamination issue, pushing rice prices down sharply.

SZCG had purchased batches of seven varieties of Hunan-grown rice, altogether 15,415 tons, in 2009. While the grain was being shipped from Sinograin’s Hunan facilities to Shenzhen, state media reported that cadmium poisoning had sickened hundreds of people and killed two in villages near the Hunan city of Liuyang.

Less dramatic but equally serious that year were results from a Nanjing Agricultural University study that found about 10 percent of all rice grown and sold in China had failed to meet government standards for cadmium.

Shaken by the Liuyang report and fearing a market backlash, SZCG sent samples of its recently delivered Hunan rice to the Shenzhen Municipal Quality Inspection Research Institute. Tests found excessive levels cadmium.

Company officials scrambled to salvage their investment. Indeed, Chen said if not for a contract adjustment with Sinograin, SZCG would have lost more than 10 million yuan on some 100,000 tons of Hunan rice in its stocks.

Agriculture officials from the Hunan and Guangzhou governments in September met in Shenzhen to discuss the crisis. They eventually agreed that SZCG, which reported excessive toxins in 91 of 105 batches of rice, would get a refund and could return to Hunan all contaminated grain.

But was the bad rice shipped back to its source, or did SZCG sell it in Guangdong? That question was raised by a Nanfang Daily report, prompting SZCG officials to call a press conference and show reporters more than 200 receipts they said proved the grain was shipped back to Hunan.

Among the receipts, however, reporters found a delivery notice signed by a rice processor in Shenzhen. Media outlets held up this receipt as proof that tainted rice had been released on the Guangdong market.

The newspaper also quoted several key officials inside Hunan’s grain supervision system who claimed problematic rice bought by SZCG in 2009 had been sold at discount prices on Guangdong rice markets. A significant amount of the grain, the report said, was sold to a Guangzhou brewery.

A SZCG spokesman subsequently changed the official tune, claiming the company could only guarantee that it had not sold tainted rice directly to consumers.

News of the snafu spread across the country. But for some, the developments were not unexpected. For example, a senior official at a grain supervision office in Jiangsu Province, north of Shanghai, said long before 2009 it was an “open secret” among industry insiders that Hunan rice was contaminated with cadmium.

‘It Hurts’

Rice grown in cadmium-polluted paddies poisoned hundreds of villagers in Japan in the 1970s. Rice they ate over time was blamed for softened skeletons, kidney failure and needle-like pain in the bones. The condition was named for the words victims screamed: “Itai, itai,” which is Japanese for “It hurts, it hurts.”

Itai itai disease has not been found in China, said Shang Qi, an environmental and health researcher at the Chinese Center for Disease Control and Prevention. He has spent the past 20 years researching cadmium’s impact on public health in China.

Cadmium levels in Chinese rice paddy soil are lower than in some part of Japan in the 1970s , Shang said, and these days Chinese consumers enjoy a diverse diet that dilutes the poisons. Another factor is that large numbers of young people have migrated from rural Hunan and other farm areas to work in Chinese cities, limiting the number and ages of the people directly exposed to cadmium in rice paddies.

Still, Shang said, cadmium has had a negative impact on public health. “As soon as cadmium gets into the soil, it’s hard to remove,” he said. “And it’s hard to remove from the human body.”

The only way to really protect people, Shang said, is to isolate them from cadmium.

That’s been an impossible task so far in Hunan, China’s fourth-largest provincial rice producer. Its farms raise more than 11 million tons of rice annually, or 11 percent of the nation’s total.

How much of that rice absorbs cadmium from polluted the soil every year is unclear. But a 2003 report by a political party group not affiliated with the Communist Party, the Zhi Gong Party Hunan Provincial Party Committee, said “about 20 percent of the rice” grown in the province “is contaminated with heavy metals including cadmium and lead. The highest levels of cadmium contamination are more than 46 times China’s health and safety standards.” The report was largely ignored.

Several Hunan farm researchers have studied cadmium content in local rice, including Hunan Institute of Geology Professor Tong Qianming. In 2005, he analyzed early and late rice in the Dongting Lake region, home to some of Hunan’s most productive farmland, and found “more than 40 percent of the rice and almost all vegetables” exceeded the national standard of 0.2 milligrams of the toxic metal per kilogram of foodstuffs.

In 2009, eight researchers from the Chinese Academy of Sciences, South China Agricultural University, Xiamen University and the University of Aberdeen in Scotland added more statistical evidence with a study published in the U.S. publication Environmental Science and Technology.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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