A baby milk trafficking investigation has been launched into networks which are bulk-buying formula and shipping it to China where it is sold at premium prices.
The Dutch government has ordered a probe into persistent shortages of certain brands of baby formula which has been linked to so-called "baby milk runners".
The formula is then sent to China where it is resold with a 100% mark up to parents.
Chinese parents are willing to pay top price for the baby milk after a 2008 scandal where Chinese formula was found to be tainted with melamine. It left six children dead and affected more than 300,000 others.
Deputy economic affairs minister Sharon Dijksma said: "I want to gather information ... over the bulk-buying and trade in the Netherlands in order to inform Chinese authorities that they are getting batches of milk powder that do not confirm to their regulations."
Formula in China is selling for twice the price There is growing concern in the Netherlands about a looming national shortage of infant formula.
Dutch Food Industry Federation (FNLI) director Philip den Ouden said: "Dutch consumers can still find baby formula, but it's getting harder and harder."
He said earlier this year retailers saw a 50% spike in sales figures of baby formula from the last quarter of 2012.
"This was strange because the number of births in the Netherlands did not go up," he said.
At a meeting earlier this week, the FNLI and food retail representatives said that a measure to merely restrict the number of tins of formula per customer was not enough.
Last month a Chinese businessman in Britain told Sky News that he was selling £5,000 of baby milk a week to China at double the price.
He said he was buying stocks from British supermarkets.
The run on formula led supermarkets Sainsbury's, Tesco, Morrisons and Asda to ration some labels of baby milk.
Danone, the makers of Aptamil and Cow & Gate, restricted purchases to two per transaction.
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