Food fraud is the deliberate and intentional substitution, addition, tampering, or misrepresentation of food, food ingredients, or food packaging for economic gain and it is a growing problem in the U.S.
The Grocery Manufacturers Association estimates that economic adulteration and counterfeiting of global food and consumer products costs the industry $10 to $15 billion per year. In addition, the cost of one adulteration incident averages between two to 15 percent of yearly revenues.
Although food fraud has been around for thousands of years, it has only recently gained academic and regulatory interest due to the increasing global impact of some high profile cases. For example, the widespread coverage of the melamine adulteration. In addition, the General Office of Accountability 2009 report on seafood fraud signaled an increased awareness of the crime.
The melamine contamination of infant formula resulted in a $10 billion price tag and affected more than 300,000 babies around the world, hospitalizing more than 50,000 of them.
An unauthorized person could steal labels then place them on a substandard product for economic gain.
In response, the U.S. Pharmacopeia Convention, or USP, began building a Food Fraud Database in 2012. It compiles both “scholarly” and “media” records from 1980 onwards, and it now contains more than 2,000 records of food fraud.
A growing number of consumers are willing to pay a premium for fruits, vegetables, and other foods labeled “organic.” According to the Organic Trade Association, sales of organic products in the U.S. jumped to $35.1 billion in 2013, up 11.5 percent from the previous year’s $31.5 billion and the fastest growth rate in five years.
Since organic food can tout prices often twice as high as conventionally produced food, the risk for fraudulent labeling has grown just as fast. In addition, it is more difficult to identify organic food fraud. Currently, the most reliable authentication technique analyzes the stable isotope composition of nitrogen, and while techniques like nuclear magnetic resonance spectroscopy are being tested, nothing is fool proof. There is a lot of headway the industry can make in this area.
Common Fraudulent Foods
The first step in battling food fraud is understanding which foods are most commonly misrepresented. The Congressional Research Service compiled a top 10 list.
1. Olive Oil. Almost 70 percent of extra virgin olive oil is said to be adulterated. Higher priced extra virgin oil is often substituted with a lower cost regular olive oil or sold or thinned out with alternative oils, such as hazelnut, soybean, corn, peanut, sunflower, safflower, walnut, vegetable, canola or palm oil, and in one case, even lard.
2. Milk. In some cases, milk was found to contain vegetable oil, whey, caustic soda, cane sugar, detergent, and even toxic compounds like melamine and formaldehyde.
3. Honey. This sometimes is a mix of high-fructose corn syrup, sucrose syrup, invert beet sugar, water, and essential oils.
4. Saffron. It may be the world’s most expensive spice, but in many cases, you aren’t getting the real thing. It often contains adulterants, such as glycerin, sandalwood dust, tartrazine (yellow dye), barium sulfate, borax, marigold flowers, and colored corn strings.
5. Orange juice. It may contain lemon juice, sugar water, paprika extract, marigold flower extract, and a synthetic sugar/acid mixture.
6. Coffee. In some cases, coffee contains roasted corn, ground parchment, barley, coffee twigs, potato flower, malt, chicory, and caramel.
7. Apple juice. It likely contains corn syrup, raisin sweetener, malic acid, beet sugar, and other juices, such as grape, pineapple, pear, and fig.
8. Tea. This can have a variety of issues. For example, inside the tea bag could be sand, sawdust, starch, China clay, used tealeaves, and color additives. However, the problems do not stop there. Tea bags are made with plastic, such as nylon, thermoplastic, polyvinyl chloride, or polypropylene. This could allow the bags to leach compounds of unknown health hazards into consumers’ tea when steeped in boiling water.
9. Fish. Higher value fish is substituted with lower cost, more abundant fish varieties. A study by Oceana checked seafood samples from popular California sushi venues, grocery stores, and restaurants and found more than half of the fish was mislabeled: snapper was tilefish and white tuna or expensive ono was replaced 62 percent of the time with escolar.
10. Black pepper. This spice can be altered with juniper berries, papaya seeds, starch, buckwheat flour, and millet seeds.
Other commonly altered foods include turmeric chili powder, cooking oil, shrimp, lemon juice, and maple syrup. The common threads, whether fraud in milk or fish, are alterations that are difficult to detect and offer high potential for financial gain.
Types of Fraud
There are also a number of ways in which foods become fraudulent. Michigan State University identified the following food fraud incident types.
Adulteration: occurs when a component of the finished product is fraudulent (for example, adding melamine to milk).
Tampering: occurs when legitimate products and packaging are used in a fraudulent way; this could be through changing expiration dates or product up-labeling.
Over-run: a legitimate product is made in excess of production agreements.
Theft: a legitimate product is stolen and passed off as legitimately procured.
Diversion: the sale or distribution of legitimate products outside of intended markets.
Simulation: an illegitimate product is designed to look like but not exactly copy the legitimate product.
Counterfeiting: intellectual property rights infringement, which could include all aspects of the fraudulent product and packaging being fully replicated.
Food fraud affects both consumers and food manufacturers. For consumers, one of the biggest concerns is health risk. While not all food fraud results in a public health risk, any act involving intentional adulteration of food has the potential to harm. From something as minor as a local fish market substituting a more expensive fish for a different type of seafood to something as widespread as the horsemeat scandal in Europe.
Since organic food can tout prices often twice as high as conventionally produced food, the risk for fraudulent labeling has grown just as fast.
One of the most significant impacts of food fraud that affects both consumers and food manufacturers boils down to loss of consumer trust. A recent example of this is the horsemeat scandal in the European Union. This occurred when items advertised as 100 percent beef were in fact horsemeat. Market researcher Mintel found that six months after the scandal hit, only half of all Brits trusted the food industry to provide safe food to eat. Eighteen percent of consumers who had previously purchased ready meals labeled as beef said they would avoid ready meals with beef as a result of the scandal, while 10 percent said they will now avoid any frozen ready meals altogether.
Since food fraud at its root is a criminal activity, companies need to combat food fraud by implementing preventive measures that increase the likelihood of detection or the difficulty in carrying out the crime. Organizations should consider a food defense strategy that addresses the entire food supply chain through the four A’s of actionable food defense: assess, access, alert, and audit.
First, businesses should assess the risks throughout their supply chains. Start by conducting a vulnerability assessment of critical control points to identify where someone could attempt product adulteration—with a special focus on upstream suppliers, not only direct suppliers, but suppliers to those suppliers.
Second, organizations should consider who has access to critical control points. In particular, they should pay close attention to who has access to labels to protect against counterfeiting and fraud. An unauthorized person could steal labels then place them on a substandard product for economic gain, putting both product safety and brand reputation at risk. Securing of cargo in transportation also should be a critical focus of a food fraud program, as product could be stolen, diluted, or otherwise adulterated, and then sold, again causing risk.
Organizations should then employ technology to alert appropriate individuals of heightened food fraud risks. In this phase, response time is critical. Monitor the prices of the commodities and ingredients used, and have alerts set if they spike in price. Pay particular attention to products that are highly profitable and easily or commonly adulterated. To minimize risk, have a system in place to send alerts as quickly as possible should an adulteration be detected. Every passing minute is a minute when more health risks could develop, which lead to a greater chance of negative impacts on brands and most importantly public safety.
One of the most significant impacts of food fraud that affects both consumers and food manufacturers boils down to loss of consumer trust.
Lastly, organizations should audit operational and regulatory compliance to ensure and maintain best food defense practices and provide documentation of compliance to regulators. In 2015, several of the FDA’s Food Safety Modernization Act (FSMA) rules will begin to be enforced and businesses will be required to document that they are following these types of practices. FSMA promotes the safety of the U.S. food supply by focusing on prevention, rather than reactive response. However, prevention is only as effective as the actual compliance processes put in place. Regular and random auditing using remote video technology can go a long way in confirming that appropriate preventative measures are in place and working.
In one of the most recent cases, Interpol, the international criminal police organization, announced that it seized
more than 2,000 tons of fake food in 47 countries in a joint operation with Europol over the course of two months in early 2015.
In the seizure, Italy had 31 tons of seafood labeled as “fresh” but had actually been previously frozen. The fraudsters doused the fish with a chemical containing citric acid and hydrogen peroxide to hide that it was rotting.
The issue is just as prominent here in the U.S. as it is abroad. In the same seizure, the FDA found that illegal dietary supplements were being sent through the mail. The crackdown, known as Operation Opson IV, is the largest effort of the agencies to target fraudulent food. All of it was seized in markets, airports seaports, and shops both in the U.S. and abroad.
Food fraud is happening all around us, and while there’s no one singular step a business can take to avoid it, it’s important to be aware of the common areas where it happens and build a plan to create as many obstacles as possible to deter the crime. In the end, this will not only help to ensure the company’s brand avoids being tarnished, but it may also end up saving lives.
Hsieh is the director of commercial and industrial marketing for Tyco Integrated Security. Reach him at email@example.com.
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