Meanwhile, the U.N. World Health Organization came out with preliminary guidelines to help authorities assess the health risks related to melamine levels in food. The agency cautioned that it is working on a more thorough assessment by meeting with scientists from around the world.
At least four children have died from kidney stones and 13,000 have been hospitalized after ingesting melamine-contaminated infant formula.
Countries have since banned the import of Chinese products containing milk, or have withdrawn products that contain milk from China, such as chocolate, over concerns they contain melamine.
Melamine is a chemical used to make plastics and fertilizers. It is believed that Chinese suppliers looking to boost output diluted their milk and added melamine because its nitrogen content can fool tests aimed at verifying protein amounts.
Monday's announcement, made by the Xinhua News Agency, followed the detention of 19 people on Sept. 14 and of 12 more on Sept. 19, reported The New York Times.
The government said police officers in northern China raided more than 40 dairy farms and milk stations and seized more than 485 pounds of melamine. The group is accused of producing melamine in underground factories and then selling it to dairy farms and milking stations in Hebei Province.
Over the weekend, Prime Minister Wen Jiabao pledged to strengthen regulation of the nation's $18 billion dairy industry, which had been booming in recent years due to government efforts to get children to drink more milk, according to the Times.
On Monday, Cadbury PLC said some of the chocolate it sells in Hong Kong, Taiwan and Australia had tested positive for melamine. The company recalled 11 products that had all been produced in its Beijing facility.
Melamine is the same chemical found in dog and cat food in the United States last year, which was blamed for sickening thousands of pets.