The multi-billion dollar problem of food fraud
Food companies are having all sorts of trouble with their brands lately, around issues like how healthy their products are or whether they have GMO ingredients.
But another big issue that can really hurt their brands is food fraud, where suppliers may do things like substitute products or ingredients with lower quality, cheaper ones.
Many food ingredients can be adulterated, according to Mitchell Weinberg, head of the global food fraud detection firm INSCATECH.
“You name it: spices, almost any kind of consumable oil, fruit juice concentrates or any kind of flavorings,” he said.
Weinberg said fraudsters usually just want to make money by cutting corners. But a few incidents have caused major harm. Nearly a decade ago, infant formula and pet foods were contaminated with melamine, an industrial chemical.
The contamination sickened several hundred thousand infants in China; some died. Thousands of pet deaths in the U.S. were also attributed to the contamination. The cases heightened food fraud awareness.
“We really realized this could be global and it could be big and it could have a huge public health threat,” said John Spink, director of the Food Fraud Institute at Michigan State University.
A Food and Drug Administration rule is requiring companies to have written food safety plans to address these kinds of threats; most have a year or two to come into compliance. And The Global Food Safety Initiative, part of the international trade association the Consumer Goods Forum, will release guidance on food fraud mitigation in March.
“Food fraud is a huge multi-billion dollar problem that we’re all trying to solve,” said Amy Kircher, director of the Food Protection and Defense Institute at the University of Minnesota, a Homeland Security Center of Excellence.
Kircher said when food fraud prompts recalls, companies’ bottom lines and reputations suffer. The institute helps companies identify red flags for food fraud.
“The longer a supply chain is, or the more complex a product is, there's more vulnerable points,” she said.
The firm PwC has also developed a food fraud risk assessment tool in conjunction with the global non-profit SSAFE. PwC's Sally Bernstein said the assessment considers a number of factors.
“Competition, are prices going up, is it scarce product, is it just generally corrupt areas that it might be developed in?” she said.
Bernstein said it’s paramount to look at these questions now, as a growing world population escalates demand for agricultural products.
"Combine this with our continuing climate impact and different perspectives of using GMOs, some of these resources we have are going to get scarce, costs are going to go up,” she said.
Bernstein said as prices rise, there’s more potential for fraud.