August 24, 2006

Finnish company to return subsidy for export of feed-grade milk powder

The Finnish Supreme Administrative Court on Tuesday (Aug 22) upheld a decision by the Ministry of Agriculture and Forestry to demand the return of nearly EUR 180,000 in export subsidies, from a company that exported animal-feed-quality powdered milk to Russia, where it was used for human consumption.

Kaslink Oy, a Finnish company in 1999 acquired four lots of milk powder from a factory licensed only to produce animal feed powder.

The company also acquired, from the same company, milk which had originally been intended for use in human food, but had been reclassified as animal feed because of microbiological problems.

The company reported that the powder nevertheless was sold as food for humans. The ministry has now decided to demand the repayment of the export subsidy after an inspection revealed the disparity. 

Kaslink appealed the decision to the Supreme Administrative Court, saying that the milk powder nevertheless met Russian hygiene requirements.

In its defense, Kaslink noted that animal feed milk powder do not pose health threats to humans and that its classification as animal feed is based onphysical characteristics, such as lumps in the powder. These physical faults were later rectified by the company.

However, the court rejected it arguments, noting that the standards of milk powder are not simply based on whether it would be harmful to health. The powder must also need to be of good quality and saleable.