China's Ministry of Agriculture said on Saturday it had made an emergency rescue plan with the Ministry of Finance to give special subsidies to the country's dairy farmers, who have suffered from shrinking demand after the tainted milk scandal.

Fewer dairy farmers were dumping raw milk as government support policies to shield them from losses paid off, said the ministry in a statement on its website.

Some dairy farmers started to dump raw milk because of decreased demand as customers lost confidence in local dairy brands after the scandal erupted last month.

The ministry said 14 local governments had already come up with policies to stabilize the dairy industry.

Some local authorities have promised subsidies for dairy farmers to reduce the cost of feeding cows. For instance, north China's Hebei Province has earmarked 316 million yuan (US$46.4 million) as subsidies on the basis of 200 yuan for each cow.

The country had sent more than 150,000 officials to overhaul milk-collecting stations and cow feed supply chains as of Thursday, said the ministry.

Altogether 18,803 milk-collecting stations had been registered and checked by then.

The ministry also investigated 98 dairy producers and farms, banned 151 illegal companies and transferred to the police three manufacturers of feedstuff that contained melamine.

It urged local authorities to reinforce bailout measures and technical guide on cow feeding and epidemic control.

In an effort to encourage dairy producers to buy raw milk, the Ministry of Finance said last month that interest rate for loans to dairy producers' raw milk purchase will be reduced by 3.1 percent, or half of the six-month lending rate, from October to December.

(Xinhua News Agency October 5, 2008)