As global supply chains and food businesses grow ever more complex and competitive, food fraud has been identified as an emerging risk for brands as well as consumers.
While most of us like to believe that information provided on food labels can be taken at face value, Jude Mason, NSF International’s director of retail, consulting and technical services for Europe, the Middle East and Africa, says that cases of intentional product misrepresentation are on the rise.
According to the Elliott Review released in September 2014, food fraud moves into the realm of crime when it no longer involves a few random acts by ‘rogues’, but becomes an activity organised by groups who knowingly set out to deceive.
Speaking at a business breakfast on the 22nd September 2015, hosted by NSF Africa at the Verde Hotel in Cape Town, Mason explained that food fraud can be divided into roughly four different categories: mislabelling e.g. saying grain-fed eggs are free range; substitution e.g. where peanuts are used instead of cumin or non-virgin olive oil instead of virgin olive oil; adulteration e.g. sand in sugar or anti-freeze in white wine; and finally counterfeiting e.g. where recognised alcohol brand bottles are filled with cheap (and potentially dangerous) concoctions.
Although individuals or companies who commit food fraud mainly do it for the purpose of pushing down production prices to provide cheaper products in the face of tough competition, the practice of fraud could ends up costing the food industry about R223 billion a year.
Mason said that food fraud is much more likely where there is a weak internal control system and little fear of exposure or likelihood of detection. For this reason it is of the utmost importance that brands cultivate a culture of self-regulation and vigilance, especially where their supply chains are particularly long or complex.
She said that successful means of countering fraud have proved to include good corporate governance, internal financial controls, internal audit systems, reporting requirements, vulnerability assessment, staff training and secure whistle blowing systems.
With 70 years of food safety and quality expertise behind them, NSF International finds itself at the forefront of the battle against food fraud, offering an integrated package of strategic and tactical services to help brands combat the risk.
Developed in conjunction with the University of Portsmouth Centre for Counter Fraud Studies and with expertise from City of London Police and BDO, NSF International presents food fraud awareness courses as well as vulnerability assessment workshops. The awareness courses are divided into three groups, focusing on the different departments within a company: executive awareness, technical team briefing and finally, marketing, buyer and supply chain best practice.
Mason emphasised the fact that food fraud is a complex commercial and supply chain issue and not something that can be solved by technical teams in isolation.
She said that a good place for companies and brands to start raising their awareness was by following a 7-step plan:
- Horizon scanning – just relying on information gathered from past food fraud cases is no longer sufficient. Brands should constantly be on the lookout for potential risks. Monitoring social media is an excellent way of doing this to stay ahead of any trends.
- Identify risk products and areas – NSF has developed a simple, yet thorough food fraud model to help companies and brands identify which areas are more high risk and should be monitored closely and which pose less of a threat.
- Identify likely forms of fraud for high risk products.
- Assess the culture across commercial and technical functions – a tendency toward greed and cost cutting could be a good indication of vulnerability to food fraud.
- Provide proper training – the NSF workshops mentioned above offer a comprehensive education opportunity across the board.
- Develop sustainable, trusted relationships – companies should work with their supplier base to do this.
- Implement an ongoing programme of supply chain assurance and auditing
While putting these precautions in place may seem like an unnecessary waste of time and resources, Mason said that companies and brands who do make an effort to manage fraud play a huge role in reducing costs and increasing profitability for everyone, ultimately reducing prices for the consumer.