Belgium, the spring of 1999: Inspectors find high levels of dioxin, along with other toxins, in eggs. An oil-and-fat recycling company had supplied a feed producer with fats that contained high levels of dioxin, and the toxic substance found its way into chickens, pigs and cattle -- and eventually into the stomachs of German consumers.

The losses were in the billions. The German Health Ministry was outraged over the Belgians, and the European Union announced drastic changes.

German, the winter of 2011: Eggs remain unsold on supermarket shelves. Mothers are concerned about giving their children cow's milk to drink. The authorities shut down close to 5,000 farms and order hundreds of thousands of eggs destroyed. Some 150,000 tons of feed were contaminated with fat containing dioxin supplied by a producer in Uetersen near Hamburg.

German Consumer Protection Minister Isle Aigner says that she finds it "truly deplorable that an entire industry is affected by individual offenders." Aigner, a member of the conservative Christian Social Union (CSU) the Bavarian sister party to Chancellor Merkel's Christian Democrats, announces talks with the German states aimed at improving consumer protection in the future.

The images, the complaints and the pledges to improve conditions are all too similar.

Germany has a new food safety scandal on its hands. And once again it is being sold as an isolated case. Yet, can this really be the regrettable lapse of a single company? Insiders believe that Aigner's position is naïve. There are too many signs of deficiencies within the system.

The radical reforms in agriculture that former Consumer Protection Minister Renate Künast, a member of the Green Party, had called for with such great passion in 2001 are now long forgotten. Nowadays, the food industry is based just as much on the division of labor as any other industry. The most important factor is price. To be able to sell eggs, meat and poultry as cheaply as possible in discount supermarkets, producers are forced to cut costs, mainly in what they feed their animals.

An Industry with a Battered Repuation

Parts of the livestock feed industry are not particularly squeamish, willing to add anything to their products that promises to improve the bottom line -- and doing their best to circumvent inconvenient regulations.

Hardly anyone in Berlin wants to jeopardize the economic success of the German food industry, the country's fourth-largest sector. It now earns about a quarter of its €150 billion ($194 billion) in annual sales in other countries.

Under these circumstances, what politician is likely to enact tougher laws and tighter regulations likely to drive up prices for German producers?

The most recent food safety scandal involving dioxin-tainted fats shows how negligently the authorities treat an industry with a reputation battered by countless infractions. "Until now, we have dealt primarily with food products and not feed," admits Eberhard Haunhorst, head of the Office for Consumer Protection and Food Safety in the northern state of Lower Saxony.

Last year, Haunhorst's employees took just 2,500 random samples from 3,600 commercial feed producers. Conditions are not much better in the rest of the country, where inspectors conducted 14,557 spot checks in 2010. About the same number of drug tests were done on the relatively small number of top German athletes.

Lacking sufficient staff to conduct their own inspections, government agencies rely on self-inspection within the companies in question. Under the somewhat vague regulations, each company must ensure that the products it puts into circulation are safe. According to Haunhorst, there are no regulations specifying what exactly feed producers have to inspect. Although many companies have introduced their own quality assurance system, none of these systems are binding, and regular dioxin testing is not explicitly required.

Johannes Remmel, a member of the Green Party and the environment and consumer protection minister in the western state of North Rhine-Westphalia, is calling on his counterparts in other states to introduce legislation that would impose stricter regulation on food producers. However, traditional farming states like Lower Saxony and Bavaria are not willing to make significant changes to existing practices. They expect that their opposition will soon convince their outspoken counterpart to come to his senses.

Industry Machinations

Harles und Jentzsch, the oil-and-fat recycling company from outside Hamburg at the center of the scandal, is a prime example of what happens when producers are held to lax standards. When CEO Siegfriend Sievert was confronted with the initial dioxin results, his first reaction was to downplay the issue, which is common practice in the industry whenever unpleasant inside information reaches the public. So-called technical fats inadvertently found their way into fats used in animal feed, he said. Sievert called it a regrettable error -- nothing more than a mistake.

It is astonishing, however, that an animal feed supplier is even handling so-called technical fat, which is not intended for use in the food chain. Commenting on the technical fat issue, Siebert said that his company maintains a "parallel production for the paper industry." And when asked why this part of the business is not mentioned on the company website, he told SPIEGEL: "It's hard to say, at the moment."

Wolfgang N. has worked in the animal feed industry for more than 15 years. He knows the Uetersen company and all of the other businesses in the industry, and he is familiar with their machinations. It is by no means a coincidence, he says, that this company, with its 15 employees, is now in the media. Many smaller and mid-sized businesses resort to trickery and cover-ups, he says. The larger companies can afford to inspect the raw materials they purchase, says N., and they do so to avoid becoming embroiled in scandals that could harm their business.

But even these market leaders do not inspect every incoming shipment, says N. The tests, including the one for dioxin, are expensive, costing about €400 apiece, and take several weeks to perform. A possible way of avoiding attention, says N., is to dilute questionable fats with other materials to keep contaminants below allowable limits in the final product.

Saving Costs

Experts like N. are also critical of the fact that many fat recyclers also handle special waste. It comes as no surprise that hardly any other industry extracts as much from trash as the animal feed industry. It turns garbage into meals and degrades animals into waste disposal systems. In this system, it can easily happen that ground feathers and sawdust are used as fillers. There are no limits to the audacity of some businesses in the feed industry, which has been known to use sewage sludge in feed and to experiment with liquid manure and tannery wastewater.

Ironically, the current scandal began with a company that was supposed to be the answer to the dioxin contamination scandals at the turn of the century. Petrotec Biodiesel specializes in turning spent cooking fat into environmentally friendly fuel. The company has operated a modern refinery in Emden in northwestern Germany since 2000. As early as the 1990s the business offered a clean alternative to the previous practice of disposing of rancid residues from the food industry but adding them to animal feed.

The business got a boost in 2002 when a Europe-wide ban on adding the spent cooking fats to feed was enacted. Roger Boeing, head of Petrotec until last year, says that it was always clear that the byproducts of the refinery operation "have no business being added to feed." After all, he adds, no one could rule out contamination of the spent fats that were being provided to the feed industry. Petrotec, for its part, did not conduct testing, because traces of dioxin are irrelevant in biodiesel, says Boeing.

Companies like Petrotec source their raw materials from all over the world. As a result, shipments from the United States are sometimes processed in Germany. And because fats are moved around a lot, contamination can easily occur during transport. Industry insider Wolfgang N. claims that shipping companies try to save costs by not routinely cleaning drums and tanks between two shipments.

'This Can Only Be the Result of Criminal Efforts'

The source of the dioxin that is now ruining business for thousands of German farmers is still unclear. When experts with the Chemical and Veterinary Inspection Institute in Münster in northwestern Germany examined the samples, they were astonished. "We have never seen this particular pattern," says Axel Preuss, director of the institute. According to Preuss, it is highly unlikely that the toxin was produced during processing at Petrotec. Now the state of North Rhine-Westphalia plans to commission a study to determine where the dioxin came from.

It is possible that the mystery will never be solved. Nevertheless, politicians are now debating publicly over changes that they say are urgently needed, although some completely underestimated the scope of the food contamination scandal at first. Several ministries in the affected German states knew before Christmas that a new dioxin scandal was brewing. Even the Federal Agriculture Ministry was in the loop, and yet the information was kept under wraps. The relevant EU agency was also not informed at first.

On the day before New Year's Eve, David McAllister, the governor of the state of Lower Saxony and a member of the conservative Christian Democratic Union (CDU), was sitting in the makeup room in a television studio at German broadcaster NDR, preparing for the recording of his New Year's address, when he received a call from Düsseldorf. It was North Rhine-Westphalia Environment Minister Remmel who, reacting to dioxin discoveries, wanted McAllister to provide him with the complete supplier lists of suspicious feed producers in Lower Saxony.

Remmel had already spent days trying to obtain important information from officials in Hanover, the capital of Lower Saxony. But it wasn't until he had called McAllister that something was done about his request. Seven days after the first dioxin report, the supplier lists were finally received in North Rhine-Westphalia.

The avalanche was not triggered by government inspection agencies or Uetersen fat recycler Harles und Jentzsch, but by a customer who had reported the dioxin discovery. An inspection laboratory at Wulfa-Mast, an animal feed producer, had found significantly elevated dioxin levels in two batches of its feed for laying hens, according to the Agricultural Ministry in Hanover. On Dec. 23, the state of Lower Saxony closed chicken farms to which the feed had been delivered.