How Food Fraud is Threatening the Food Industry

Some of the Vulnerabilities in the Food Supply Chain

The chocolate you eat, the milk you put in your cereal, the sauce you add to your pasta – these all could actually be fraudulent ingredients. How would you really know?

Food fraud is a growing problem worldwide that not only costs the food industry billions each year, but also puts consumers’ health at risk .

This blog article looks at the the issue of food fraud, in particular fraudulent ‘organic’ labelling and the implications for the food industry.

Surge in Demand for Eco-Labelled and Organic Foods

The demand for sustainable and organic food is rising, with the latter according to major retailers, experiencing its strongest growth for more than a decade.

The global organic market is valued at $81 billion. The US represents the largest organic market, with sales reaching $43 billion in 2016.

The UK organic market is also witnessing a clear growth phase, with sales of food products surging by 7% to reach £2.09 billion in 2016. This can be attributed to greater availability of products combined with increased consumer interest and more affordable prices.Increasing demand for organic foods

Growth Across all Sectors

Organic food is not just fruit and vegetables. Globally, sales of organic products appear to be increasing across all sectors.

While the fresh produce sector, which includes fruit and vegetables continue to be the most popular choice for shoppers, an increasing number are also willing to pay a premium for organic fish, dairy produce, chocolate and grocery items such as olive oil, pasta and sauces. In some cases, customers are willing to pay twice as much for foods that are labelled “organic”, “sustainable” and “premium”.

But are they necessarily getting what they pay for?

Organic, Eco-labelled and PDO Foods Face Big Risk

Not always, according to Ecovia Intelligence who claim organic, eco-labelled and protected designation of origin (PDO) foods face a high risk of food fraud and mislabelling.

These food products are at most risk of fraud due to the high premium associated with certified products which typically command a higher price.

So, what does food fraud involve exactly?

Three Categories of Food Fraud

Food fraud can take many forms. It may refer to fraudsters taking advantage of the rising demand for certain food products, and deliberately placing food on the market for economic gain with the intent of deceiving the consumer. Alternatively, it could refer to the mislabelling of food and ingredients or substitution of a higher-valued product with a lower one. It may also refer to the introduction of food onto the market that contains residues of prohibited substances.

Food fraud is nothing new. However, it’s gained prominence in recent years in the food industry, which has experienced a steady rise in the abuse of ‘organic’ labels attached to products that do not comply with the organic certification. Instead, these food items use cheaper, sub-standard and sometimes unsafe ingredients.

Food Fraud Happening Throughout the WorldHigh risk of food fraud

Although sales of fraudulent organic products are fairly infrequent, a number of incidents have been exposed in recent years.

One of the most notable incidents was when pre-prepared foods, advertised as containing beef, were found to contain large amounts of horsemeat. Yet, there was no declaration on the package.

In another instance, 36 million pounds of soybeans falsely labelled as ‘organic’ were shipped to California via Turkey. However, they were not organic, but conventionally grown soybeans. By obtaining fraudulent USDA organic status, this resulted in the soybeans value surging by approximately $4 million.

Significant Threat to Global Food Sector

Food fraud poses a significant global threat for the food industry. The economic costs are extremely high, estimated by the Grocery Manufacturers Association (GMA) as costing the food industry between $10 billion to $15 billion a year. Earlier this year, allegations of bribery and the suspected sale of rotten meat in Brazil resulted in the country’s meat industry losing an estimated €31.3 billion in lost meat export revenue.

There’s also the food safety risks associated with food fraud. According to World Health Organisation (WHO), an estimated 600 million people fall ill due to contaminated food each year – that’s approximately one in ten people!

And it’s not only consumers that are vulnerable to food fraud as food supply chains are also at risk. Even more so those with global, long or complex supply chains, which makes detection a challenge. For instance, the complex supply chains for cocoa and sugar place them at a high fraud risk due to ingredients having to pass through multiple intermediaries.

Transparency the Solution

The economic implications of food fraud, as well as the adverse impact on brand image and reputation are significant. So, it’s no surprise that technology is already being deployed to counter the global fraud threat.Risk of food fraud

Many companies are also taking huge steps to strengthen their supply chains, and to ensure they have greater transparency in their ingredient chains.

This is being further supported by consumers demanding improved transparency and to know exactly what ingredients are in the products they are purchasing. What’s more, they are eager to know the product origin, production methods and environmental credentials.

Technological developments are also playing an important role. For instance, ‘smart’ labels and mobile apps enable more information to be communicated to customers. Using three types of technology; QR codes, Barcodes, and near field communication (NFC) tags are allowing consumers to track the journey of their food with exact times and locations from farm to store.

Using Pigging to Improve Traceability

Although pigging technology can’t help you directly combat food fraud, it can certainly help improve the accuracy and reliability of product lot or batch traceability.

Product recalls are often one of the major consequences of food fraud. In the unfortunate event that it does happen, having accurate lot traceability information will reduce your recall cost, minimise the damage threatened by a recall on your customers, and lessen the negative impact to your brand image.

Pigging technology goes hand in hand with lot traceability – it helps segment and separate batches by creating clear distinct separation between ingredients, or even containers.

In this way, pigging will considerably lower costs, especially if food fraud, contamination or other issues arise. Pigging and product recovery has a wide range of other benefits, which include increased yield, reduced water usage, improved efficiency, lower product changeover and cleaning times and a reduction in waste.

Find Out More

To find out more about lot traceability, loss prevention and for more information about pigging systems for process industries, please contact HPS or talk to your local HPS representative.