April 10 - The beleaguered China dairy industry has appealed to the government for help as it bids to recover from the crippling melamine-tainted milk scandal last year.

Dairy Association of China Director Wang Dingmian said companies have some 250,000 tonnes of milk powder in stocks that they are currently unable to sell, compared to near zero before the crisis hit last September.

A loss of confidence in the industry from domestic consumers is seen as the cause of the drop in demand. The provinces of Shaanxi, Hebei, Xinjiang Uygur and Ningxia Hui are believed to be the most affected by the slump.

Gao Hongbin , Vice-Minister of Agriculture acknowledged on Wednesday that the situation was bleak and called on the government to implement policies to help dairy firms.

The China Dairy Industry Association (CDIA) is reported to have petitioned the Ministry of Industry and Information Technology (MIIT) for government help to buy up to 33% of the unsold stocks. The proposal is that the milk powder could then be donated to those affected by future natural disasters, orphans or the elderly.

Wang Weimin, secretary-general of the Dairy Industry Development Association of West China, claimed about half of the milk powder products in stock were produced before the end of last year.

"Although the products have been proven to be free of melamine by government quality control authorities, not many are willing to buy them," he said. "The whole industry chain is facing huge challenges."

The problems have been worsened by an influx of cheap foreign milk powder, which many customers now prefer because it is thought to be safer. Weimin said the price of imported raw milk powder has dropped almost 50% from more than 40,000 Yuan (US$ 5,850) per ton before the melamine scandal to around 22,000 Yuan a ton.

The scandal, which came to light last September, killed six infants and sickened at least 300,000. The industrial chemical was added to milk powder to give the appearance of a higher protein content.