Protecting the food chain from food fraud
Food fraud incidents are on the rise and can damage a company’s reputation for generations.
Food fraud isn’t new. In fact, it’s described as the second oldest profession.
However, today if a tampering incident occurs, social media can quickly blast out allegations about the fraud nonstop. Who doesn’t remember, for example, recent exposures of melamine in China’s baby food and pet food, horse meat in European beef and date tampering at McDonald’s, KFC and Pizza Hut in China?
Food fraud is defined by the United Kingdom’s Food Standard Agency as date tampering or selling goods past their use-by date, packing and selling products with an unknown origin, deliberately mislabeling food like farmed salmon as being wild, or using stolen or poached animal meat.
“The main fraud challenges with animal proteins tend to be labeling with regards to production and harvesting methods — antibiotic use, organic, cage free, etc., species integrity, such as fish fraud or horse meat, and the use of alternate protein sources as fillers — soy protein, for example,” says Karen Everstine, Ph.D., research associate at National Center for Food Protection and Defense (NCFPD), University of Minnesota, St. Paul, Minn.
Adulterated changes can be harder to pinpoint in imported foods, which have tripled in the past 10 years, says the Food and Drug Administration. For some food categories, imports comprise most of the product selection. An article in the Huffington Post noted 85 percent of seafood is imported, 39 percent of fruits and nuts and 18 percent of vegetables.
Shaun Kennedy, a food fraud expert and former head of the NCFPD, says about 10 percent of the food supply in the developed world today is considered to be adulterated. Other estimates from the International Chamber of Commerce put the number around 7 percent.
And these alterations come at a cost. Food fraud ultimately costs $49 billion annually, according to the World Customs Organization.
“Product substitution, such as beef in place of lamb and many other white fish species in place of cod, is becoming increasingly common place,” says Nicola Vosloo, senior leader of strategy and global applications for food at PerkinElmer, in Waltham, Mass. “One challenge being with fish, for example, is when it is filleted it is very difficult to distinguish between the different species making it easier for fraud to go undetected.”
Usually, “food fraud is a public vulnerability, not a threat,” says John Spink, Ph.D., assistant professor and director of the Food Fraud Initiative, at Michigan State University, East Lansing, Mich. “They are exposed to risk but not harmed by it yet.”
A globalized supply chain
Today, the scale of fraud — and the global food supply chain — is so big that once a dangerous product (such as melamine in baby food) is put out there it is complicated to fix, because there is no way to recall and destroy all of it.
“Because of the globalization of the supply chain, there have been significant cases of food fraud that have had a significant impact on consumers’ lives, such as the melamine in China’s baby food,” says Serban Teodoresco, global managing director of the Food Safety Consulting and Technical Services at NSF International Global Food Division, Montreal.
In the summer of 2014, McDonald’s and other fast-food companies fell victim to date-code fraud in China when a video surfaced showing employees of its supplier, Shanghai Husi Food Co., putting expired product back into the product stream.
“Think of the scope of a national recall for McDonald’s; they also lost sales and their stock price was hit,” says Spink. “So, food fraud has a major economic impact as well.”
Supply chains are becoming increasingly complex, but the fraudsters are taking every opportunity to infiltrate where they can.
“Getting better visibility into your complete supply chain, from the source to your factory door, will help you assess and identify any potential risk for fraud,” says Vosloo. “Start thinking like a fraudster to try and beat them.”
The food industry tends to focus on site management, such as the plant, distribution centers and grocery store, for fraud prevention. But Teodoresco cautions companies not to overlook transportation, as well.
“One of the weakest links for fraud is transportation,” Teodoresco says. “In the plant, managers have more control. But with transportation, there is just one truck with one driver.”
Breaking down food fraud
Michigan State University’s Anti-Counterfeiting and Product Protection Program has released information on the seven most common forms of food fraud, which is the intentional misrepresentation of food, ingredients or packaging for economic gain. The authors, John Spink and Douglas Moyer, singled out these cheaters:
• Adulteration: A component of the finished product is fraudulent.
• Tampering: Legitimate product and packaging are used in a fraudulent way.
• Overrun: Legitimate product is made in excess of production agreements.
• Theft: Legitimate product is stolen and passed off as legitimately procured.
• Diversion: The sale or distribution of legitimate products outside of intended markets.
• Simulation: Illegitimate product is designed to look like, but not exactly copy, the legitimate product.
• Counterfeit: All aspects of the fraudulent product and packaging are fully replicated.
Retaining consumer confidence
Certainly, food fraud creates great consumer concern. “In the U.K. and Europe, consumer confidence has really been impacted by fraud — there is a lack of trust and belief in premium products,” Spink says. “In China, consumers lack confidence in their own supply chain.”
For example, infant formula, in particular, is smuggled into China from other countries.
“Hong Kong has limited the number of cans that can be exported to two per person,” Spink says. “There are twice as many arrests for baby formula than smuggling drugs.”
The U.S. consumer seems less worried about food authenticity than Europeans, Spink says.
“In the United States, there is high confidence in our supply chain,” he says. “There will probably be a few big incidents that raise awareness of food fraud in the future. But I see agencies moving together quickly to manage food fraud prevention well, so their plans will minimize any impact from fraud.”
Standardizing prevention efforts
The same government agency and industry networks and collaboration that are in place for Hazard Analysis and Critical Control Points (HACCP) and food defense are being utilized for food fraud.
“Networks are working on harmonizing terms and prevention of all types of food fraud — date coding, ingredients and smuggling, not just adulterants,” says Spink.
The Global Food Safety Initiative (GFSI) is taking the lead with food fraud think tank recommendations, position papers and clear, industry-vetted research, he says.
The FDA is also currently proposing to include economically motivated adulteration (EMA) measures as part of preventive controls, which is similar to HACCP.
“Therefore, ideally, food safety and food fraud measures would become more integrated,” Everstine says.
NSF’s food fraud program focuses on increasing transparency, traceability and data sharing among government, industry and third-party organizations worldwide.
According to Teodoresco, “we work with company CEOs to inform them about how significant food fraud is and how it can affect their company. It’s not just some incident; it can affect their brand reputation forever.”
An NSF/Oxford University study found that depending on how a company reacts to a fraud incident determines whether consumers can trust them.
“When we look at best practices, the food industry tends to look only at the food industry for guidance,” Teodoresco says. “But they should examine the pharmaceutical or airline industries for positive examples, as well.”
Teodoresco says fraud prevention efforts should include instilling a culture that avoids fraud, understanding the root cause of the problem and not returning to business as usual.
“How can companies regain consumer trust, communicate and say fraud won’t happen again?” Teodoresco says.
The Grocery Manufacturers Association has also released a report on how to improve detecting and preventing fraud. The major findings suggest becoming more proactive in addressing EMA to counter global fraud threats, finding new ways to share information and promote collaboration within the industry, government, academia and nongovernmental organizations, and engage government as a facilitator of global standards and intelligence.
Closing the gaps
In the past, companies have relied upon the Commission on Audit from their suppliers, taking it at face value, Vosloo says.
“I see a shift in this responsibility over time to food manufacturers and processers taking greater ownership of authenticity,” Vosloo says. “There will be increased testing of raw ingredients and a greater visibility into the complete supply chain, not just your immediate supply chain.”
The continual development of analytical methods to detect adulterated and authenticate ingredients is important, Everstine says.
“However, more testing is not the ultimate solution,” she says. “More efficiently addressing the problem will involve identifying the riskiest ingredients — they tend to change over time, using data analysis methods and intelligence gathering. In this way, crucial resources for method development, inspections or laboratory testing can be focused on the highest risk ingredients.”
Processors need to understand what areas of their operation are most vulnerable or they will have a false sense of security, Teodoresco says.
“Also, all employees need to understand that even the smallest level of fraud is unacceptable,” he says, otherwise a grocery store manager, for example, may think it’s OK to sell product that is expired.
Past history has certainly indicated that food fraud events will continue to occur.
“The challenge for the industry will be how well positioned they are to react quickly and preserve consumer confidence,” Vosloo says.