March 30 (Bloomberg) -- U.S. investigators found a substance used to make fertilizer in samples of Menu Foods Ltd. pet food blamed for the deaths of least 16 cats and dogs.

Investigators discovered melamine, which is also used to make plastic dishware, in food samples, said Stephen Sundlof, the director of the Center for Veterinary Medicine at the U.S. Food and Drug Administration. Melamine was also found in gluten used to make the food.

``At this point, we do not know how melamine got into the wheat gluten,'' Sundlof said at a news conference in Rockville, Maryland today.

Melamine, a fertilizer ingredient in Asia, was found in the urine of cats that died of kidney failure and in the kidney of another animal. The deaths prompted Menu Foods, based in the Toronto suburb of Streetsville, to recall 60 million cans and pouches of pet food March 16.

Officials traced the wheat gluten to China and have begun inspecting imports. A shipment of the suspect wheat gluten was received by one U.S. maker of dry dog food, and it isn't known whether it was used in the final product, Sundlof said.

FDA investigators were in the company's plant today to determine if the gluten was used. Officials declined to name the manufacturer of the dry food.

Menu Foods said the tainted gluten was used at two of its plants and came from one U.S.-based supplier, which it declined to identify. Chief Executive Officer Paul Henderson, speaking at a news conference today, said the company didn't know how many pets have died from eating the poisonous food.

Compensation

Menu Foods has responded to more than 300,000 calls from concerned pet owners, Henderson said.

Menu plans to reimburse affected pet owners for veterinary bills and is working out details of the payments with its insurers, Henderson said. The company estimates the recall will cost C$30 million ($26 million) to C$40 million.

The FDA has received more than 8,000 complaints from pet owners, Sundlof said. PetConnection.com, a Web site that is tracking the recall, said it received reports of 2,400 pet deaths as of this morning.

Menu Foods recalled food sold under brands such as Procter & Gamble Co.'s Iams, Nestle SA's Mighty Dog and retailers' own labels. Iams dry food isn't made by Menu Foods and doesn't contain wheat gluten, Cincinnati-based Procter & Gamble said today in a statement.

Units of Menu Foods Income Fund, the income trust that owns Menu Foods Ltd., have plunged 45 percent since March 15, the day before the recall. They rose 16 cents, or 4.1 percent, to C$4.05 by the 4 p.m. close of trading on the Toronto Stock Exchange.

New York Finding

FDA investigators found no trace of the rat poison aminopterin in tests of the pet food, a chemical that New York state officials said last week was the likely culprit. The FDA investigation is now focusing on melamine and the wheat gluten.

New York officials lack enough data on melamine ``to conclude it could cause illness and deaths in cats,'' New York State Department of Agriculture Commissioner Patrick Hooker said in an e-mailed statement today. ``We stand confident in our finding of aminopterin.''

The affected pet food consists of cans and pouches of cuts-and-gravy style food. Retailers including Royal Ahold NV's Stop & Shop, Kroger Co., Safeway Inc., Wal-Mart Stores Inc. and PetSmart Inc. sell the products, Menu Foods said on its Web site.

Normal inspections of pet food wouldn't have detected melamine, Sundlof said. Routine inspections of Menu Foods' products found no violations, he said.

The company has said reports of pet deaths and illnesses from its food coincided with the use of a new supplier for wheat gluten.

To contact the reporters on this story: Kevin Bell in Toronto at kbell2@bloomberg.net; Danny King in Los Angeles at dking19@bloomberg.net.

Last Updated: March 30, 2007 16:21 EDT