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Trends and developments in food fraud 2017

Our principal consultant, Karen Constable, spoke at the World of Food Safety Conference in Bangkok in June 2017 about trends and developments in food fraud.  Here are some of the highlights of her presentation.

Recent incidences of food fraud

 

Emerging trends in fraudulent activities

Recently, we have been seeing more sophisticated operations being discovered.   As an example, a large operation that was making counterfeit versions of popular brands of sauces and condiments was discovered in China in January of 2017.  The operation was being conducted in a residential area, with processes spread across 50 buildings.   The operation was said to have been active for over ten years and was producing goods worth around $14.5 million per year.

Halal fraud appears to be on the rise, with developing countries such as Indonesia and Malaysia at high risk.  Halal meat is often indistinguishable from its non-halal counterpart which means that everyday consumers are not able to verify food sellers’ claims about halal status.  Falsely claiming halal for a food item is an easy fraud to perpetrate, especially during the retail sale of un-packaged food in restaurants and takeaway stores.  Halal fraud can be as sophisticated as forgery of certification documents accompanying bulk shipments of food or as simple as dishonest signage in a takeaway store.  There have been a number of incidences of halal fraud in the news lately and these are almost certainly the tip of the iceberg.  Indonesia and Malaysia are some of the world’s biggest markets for halal food.  Both countries have variable and sometimes chaotic food supply chains accompanied by uneven regulatory enforcement.  Halal forgery also happens in the developed world, with a recent prosecution in the United Kingdom in which the fraudster is alleged to have netted a quarter of a million pounds.  With this kind of money up for grabs, you can expect halal fraud to continue.

Counterfeiting of middle range foods, rather than luxury foods is another emerging trend.  Most well-known examples of food counterfeiting in past years have been linked to premium brands and luxury goods such as expensive wines, whiskys, truffles, saffron and caviar.  However there are increasing reports of mid-range goods being ‘faked’, with condiments, sauces, chocolate bars and beverage mixes all having been fraudulently counterfeited in recent times.

Are these new types of food crime?  It’s unlikely.  However our awareness and our detection activities are increasing.  It also appears that there are more whistle-blowing activities; it is possible that more people are willing to report on suspicious activities, as was the case with the aforementioned Chinese condiment operation, or perhaps authorities are more likely to act upon reports, as was the case with the recently uncovered Brazilian meat scandal.

New responses to food fraud

Prosecutions, fines and other enforcement activities are increasing in some countries.  India, in particular, is investing heavily in new laboratories and extra resources in the fight against food fraud.  The Indian press writes about food fraud on an almost daily basis and consumer awareness is at an all time high.  India is also considering enforcing a life-long prison sentence for perpetrators of food adulteration.  Fines of more than $3 billion have been proposed for one of the businesses at the centre of the Brazil meat scandal.  That’s quite a fine!

Europe has also discussed increased sanctions for food fraud, with the hope of harmonising the sanctions across the European Union.

Operation Opson, the annual food fraud operation of Interpol and Europol, which this year netted EUR 230 million worth of seized foods, will be extending its reach beyond Europe in coming years.

Anti-counterfeiting technology continues to be developed, expanded and improved at a fast rate.  The big news in the previous 12 months in this area is the implementation of block-chain technology into the management of supply chain traceability.  Walmart are using block-chain technology for pork and baby formula in China, while Blackmores Australia is using it to protect their brand in Asia.

Updates to food safety standards

Food fraud prevention and mitigation measures are being introduced into all major food safety management systems.  The Global Food Safety Initiative (GFSI), a group of food companies whose mission is to harmonize, strengthen, and improve food safety management systems around the globe, sets guidance for food safety standards.  Well known GFSI standards for food manufacturing include BRC, FSSC 22000 and SQF.  Starting in 2016, all GFSI food safety standards have been progressively updated to include requirements for food companies to perform a food fraud vulnerability assessment and create control plans for food fraud.  Issue 7 of the BRC standard and version 4 of FSSC 22000 already incorporate these requirements.  SQF Edition 8 has been published and will be implemented from January 2018.

All GFSI-endorsed food safety standards and many standards that are not endorsed, such AIB and Woolworths Australia’s VQA standard will require or already require food fraud vulnerability assessments and food fraud mitigation plans to be implemented by food manufacturers.

GFSI standards have been updated to address hazards from food fraud

 

Regulatory changes

The Food Safety Modernization Act (FSMA) in the USA includes specific requirements which are aimed at preventing public health hazars from malicious tampering as well as fraudulent adulteration.  Hazards to food safety from intentionally adulterated food must be included in the preventive controls hazard analyses under FSMA.  The rules associated with the FSMA are being progressively introduced in the USA.  They will also apply to food businesses that export to America.

Want to learn more?  Ask us a question, we love to help.

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Letter from Thailand – food fraud, food safety, food excellence

The World of Food Safety Conference was held in Bangkok in conjunction with THAIFEX in early June 2017.  Delegates represented large and medium sized food businesses in South East Asia as well as government and trade organisations.  Thai, Singaporean, Malaysian and Myanmar delegates dominated the group.  The attendees were hungry for knowledge about food fraud and food fraud prevention; almost 50% of the topics across the two-day conference were related to food fraud, traceability, supply chain management and crisis management.

As well as speaking about recent trends and developments in food fraud, I enjoyed learning from the other speakers, sampling the wonders of THAIFEX and enjoying Thai food which was truly excellent.

Karen Constable spoke about Food Fraud at World of Food Safety Conference

 

Background checks as an aid to fraud mitigation

I was lucky to gain some fantastic insights into the intricacies and challenges of performing background checks on business people in Asia from Jingyi Li Blank,  Mintz Group.  Background checks on business owners are a great way to understand vulnerabilities to food fraud when seeking new suppliers or investigating sources of new raw materials.  South East Asia and China present some challenges for companies performing background checks, including the way that people in the area often have multiple spellings and versions of their names, as well as issues related to cross-border jurisdictions.

Prevalence of food fraud prevention systems

Julia Leong from PricewaterhouseCoopers shared some statistics on current levels of compliance among food companies who have interracted with the PwC SSAFE tool: 41% of companies have no systems to detect or monitor fraud, 36% have no whistle-blowing systems and 38% do not perform background checks on employees. Food businesses that neglect these areas are exposing themselves to serious financial risks from food fraud.

Support for food businesses in developing countries from GFSI

It was heartening to hear about the new program being launched by the Global Food Safety Initiative (GFSI) in developing countries.  The Global Markets Program is designed to bridge the gap between food operations with no formal food safety systems and those who have GFSI-endorsed certification by helping companies to develop food safety management systems through a process of continuous improvement.  Within the program, manufacturing support systems related to hygiene and other basic principles of food safety are implemented progressively over a defined time period as the companies work to attain either a basic or intermediate level of compliance.  The results are not accredited but become the foundation for further improvements so that the business can work towards implementing a complete food safety program.

Sustainability in the food supply chain; palm oil and coconut oil

Matthew Kovac of Food Industry Asia presented on behalf of Cargill, providing a fascinating introduction to the sustainability programs Cargill has introduced in their palm oil and coconut oil supply chains.  Cargill is a major grower, purchaser and refiner of palm oil and are aiming for a 100% sustainable target by 2020.   For Cargill, sustainability in palm oil means:

  • No deforestation of high value areas
  • No development on peat (burning beat causes air pollution and contributes to climate change)
  • No exploitation of indigenous peoples
  • Inclusion of small land holders

Coconut oil sustainability is being improved in conjunction with The Rainforest Alliance, by providing training and support for Filipino growers so that they can increase their yields, as well as providing them with access to wood fired dryers that allow the growers to produce copra that has better colour, less aflatoxins, less environmental contaminants and lower free fatty acids than traditionally sun-dried copra.

The many and varied hazards in HACCP for fish

It was both fascinating and scary to be reminded of the hazards to food safety from fresh fin fish by Preeya Ponbamrung, from Handy International: pathogenic bacteria, viruses, biotoxins such as ciguatera, biogenic amines (histamine being the most common), parasites and chemicals such as water pollutants and antibiotics used in aquaculture.  That’s quite a hazard list; it was heartening to hear Ms Ponbamrung describe the control methods employed by the fish processing industry to keep those hazards out of our food supply.

Crisis communications; winners and losers

We learnt about successful methods – and not-so-successful-methods – that food companies use to communicate food safety and food fraud risks to consumers.  Nestle was applauded for its fast, clear and practical response to reports of counterfeit versions of its popular MILO chocolate drink powder in Malaysia.  The brand owner promptly published instructions for consumers on social media and in the local press explaining how to tell the difference between the fake and the real product.

Image: MILO Malaysia Facebook, March 2015

 

Some other companies do not do so well with crisis communications.  Cesare Varallo of Inscatech, showed us that the public communications of Chipotle in the USA about its food safety problems were less than ideal.  The brand has suffered serious losses and it has been reported that 13% of its former customers say they will never return.  Time is of the essence in a food safety or food fraud crisis.  Does your company have a crisis plan?

Want to know more about any of these topics?  Get in touch with us, we love to help.

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Food Fraud News – May 2017

European food supply at risk from climate change affects on other continents

A study that examined European water demand found the EU to be likely to be affected by droughts in other countries because of its reliance on certain food crops that do not grow in Europe.  They predicted that droughts in growing areas for almonds, pistachios, grapes, rice, soybeans and sugar cane would have serious impact on European supplies and prices.  Droughts are expected to occur more frequently with climate change.  The largest impact is expected to be on the European meat and dairy sector due to its reliance on soy for animal feed.  Increasing prices and factors that affect supply can increase the risk of food fraud, with food and feed that is imported from drought affected countries likely to become more vulnerable.

Condiments and sauces; counterfeiting operations, products uncovered more frequently

Another counterfeit condiment operation has been uncovered in Asia in recent months.  This follows an earlier discovery, in January this year of a sophisticated factory complex in China that was manufacturing a range of sauces and noodles and packing them with counterfeit branding for Maggi, Knorr and Nestle.  Fifty small factories were hidden in a residential area, and managed to produce goods worth $14.5 million per year, according to one estimate.  In Europe, counterfeit seasoning cubes were seized during a recent enforcement operation.  And there have been two recent incidences of salt fraud; one in Nigeria and one in Scotland.  Is condiment counterfeiting growing or are we just getting better at finding it?  Only time will tell.  What we do know for certain is that it is not only premium, luxury goods that are at risk of being copied.

Salt production, Mauritius

Coffee price volatility set to increase

Larger than usual volatility in coffee pricing is predicted for the coming year as weather events and an unusually large predicted crop of arabica in Brazil are expected to impact world markets.  In addition, the Honduran coffee harvest is at risk from a leaf mould disease.  The previous outbreak in that country had a lasting impact on the harvest.  Coffee is already at high risk of food fraud and increasing volatility in the markets in the short term is likely to increase the risk.  Long term predictions for coffee supply are already grim because of climate change’s effects on growing conditions.  Heavy disease burdens in key growing areas will exacerbate the problem and ultimately increase the supply problems worldwide, increasing coffee’s vulnerability to food fraud.

Coffee,authentic,fraud,horizon scanning
Increased volatility in coffee markets is predicted for the coming year

Vertical integration in the food supply chain in Italy

An Italian consumer group has warned that at least 5000 restaurants in Italy are run by the mafia.   The mafia in Italy are also said to be involved in food fraud within primary production, manufacturing and wholesaling sectors.  Any restaurant that is run by an organisation that has links to organisations that are perpetrating food fraud provides the perfect sales outlet for the fraud-affected food.  The foods are, in effect, exchanged for ‘clean’ currency from restaurant patrons, essentially laundering money derived from food fraud operations.  It has been reported that some of the mafia-run growing operations are being done on polluted land that is not safe for food production.

Get more news

Learn about the food fraud risks for hundreds of different products in our Food Fraud Risk Information Database, hosted by Trello.  It’s new, it’s free, check it out today.

food fraud risk database

 

 

 

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What’s the go with garlic?

Whole fresh garlic is at low risk of fraudulent adulteration, however, as with other produce, there is a medium to high likelihood of its origin or organic status being misrepresented in markets where consumers pay a premium based on those characteristics. For fresh bulb garlic, claims about chemical treatments, such as bleaching, are also at risk of being fraudulent.

For powdered and flaked garlic, the risk profile is different.  Dried and powdered garlic are at higher risk of adulteration than whole bulbs. All types of dried, flaked and powdered garlic are at risk of undeclared preservatives or additives, undeclared fillers (diluents), such as chalk or flour, misrepresentation of organic status or origin and smuggling.  In early 2017, some food companies in USA and Australia found garlic powder that was sourced from China to be contaminated with peanut.

In October of 2016, it was reported that speculators were purchasing huge quantities of garlic in China, the world’s largest garlic exporter, after prices almost doubled in the previous year. This has led to supply issues and very high prices. Dried garlic is affected even worse than fresh bulbs.

In April 2017, CBC News (Canada) reported that garlic trading trends have food fraud expert Professor Chris Elliott mystified, because sales are at normal levels despite much of China’s recent garlic crop being devastated by a cold snap.  This might be because the speculators who were hording garlic in the previous year have been releasing it on to the market this year.

Want information just like this for hundreds of other food types?  Check out our Food Fraud Risk Information database.

Is garlic at risk of food fraud?

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Food Fraud Risk Database

It’s huge, it’s completely free and open-access; no log-in required.  It’s our

Food Fraud Risk Information Database

Compiled by food fraud experts and containing information about hundreds of different food types, including past incidences of food fraud and emerging threats, you can use it to meet the requirements of your food safety management system, for

  • food fraud vulnerability assessments,
  • food safety risk assessments
  • hazards from intentional adulteration requiring preventive controls (FSMA)
  • pre-filtering and
  • horizon scanning for emerging threats

You can choose to ‘watch’ the database to receive notifications every time new information is added.  You can also watch individual food types (say “Beef”) to receive updates for just that food type.

Access is free, although if you want to receive notifications you will need to create a (free) Trello account.  We do not receive income from Trello for new sign-ups.

Check it out today

food fraud risk database
Food Fraud Risk Information database, created by Food Fraud Advisors, hosted by Trello.com