Global food fraud: Joining forces for a multi-faceted solution

By Maria Fernandez Guajardo, VP of product at Clear Labs

- Last updated on GMT

Maria Fernandez Guajardo on the state of food fraud
Maria Fernandez Guajardo on the state of food fraud

Related tags: Supply chain, Food, Fraud

The Obama administration recently finalized a food safety transport rule.

Issued by the FDA and required by the 2011 Food Safety Modernization Act (FSMA​), the rule “applies to food transported within the US by motor rail vehicle, whether or not the food is offered for or enters interstate commerce​” and requires shippers, loaders, carriers, and receivers to follow best practices for sanitation when transporting food.

The new rule is a major step forward in protecting our food supply chain; of course, the reach of national legislation can only extend so far. The food industry is complex and even if the majority of our global trade partners enforce these regulations, adulteration will continue to threaten our food supply chain. It’s a problem that requires a multi-faceted solution.

Thankfully, international organizations have stepped up to help ensure safety of the supply chain. Take Interpol Operation Opson IV​, for example, which resulted in the seizure of more than 2,500 tons of counterfeit and illicit food. Despite these efforts, academia estimates that 4% of food fraud remains undetected.

It’s high time to recruit more players to help cover all the bases.

Food fraud, a scam for the ages

While there is no statutory definition of food fraud, it is generally used to describe the deliberate and intentional substitution, addition, tampering, or misrepresentation of food, food ingredients, or food packaging; or false or misleading statements made about a product for economic gain.

The above definition deliberately omits the “who” – the most commonly identified victim is the consumer. This is undeniably true, but it’s also true that manufacturers and retailers suffer the consequences of food fraud that has occurred earlier in the supply chain. Companies who strive to build quality, safe and trustworthy brands can be subjected to a backlash for a crime they did not commit.

The history of food fraud begins with the advent of merchant capitalism: merchants from the Middle Ages regularly adulterated spices with dust, stones, or seeds to accommodate supplier shortages. By the 18th century, more aggressive forms of economically motivated adulteration (EMA) included “dirty dairy,​” when merchants began diluting milk with water and adding color with chalk or plaster.

Though we still suffer instances of diluted dairy, we’ve got more to worry about than milk and spices. Recent cases of adulteration include Pangasius sold as grouper​ and not-so-extra virgin​ olive oil.

Like most issues with food safety, food fraud is a global, double-edged sword for both company and customer, costing the industry $10 to $15bn per year and individual businesses between 2% to 15% of annual revenue per case. Brands risk irreparable decay; in fact, the entire European food system was put into question after the horsemeat scandal​ rocked the industry.

Not only are consumers potentially paying premium prices for low-quality products, but there’s a huge health risk. There’s no way to monitor the standards by which the ingredients are produced, stored or distributed, and incorrect labeling of foods means consumers cannot confidently make informed decisions based on allergies or other dietary restrictions.

The Complexity of Globalization

Today’s global industrial capitalism may look very different than its 15th century merchant trade predecessor, but they share a common ground – both uncover serious gaps in the globalized food supply chain.

Let’s take spices, for example, a seemingly small portion of our diet with a big impact as a major driver​ in world trade and globalization. A typical life cycle of a spice sold in the US passes through multiple doors in different countries. Consumers first come in contact with a product after it’s been through at least three iterations by the supplier, importer, processor, and retailer. While the market is trending towards processors buying directly from the source, there are still enough middle men to leave the door cracked for adulteration and exploitation to creep in.

The complexity of processed foods and the reality that multiple ingredients are increasingly being sourced from different countries contributes to a complicated supply chain.

Power in Numbers

Over time, regulations and government organizations have played a major role in helping brands contribute to a free and safe modern world, but their broad scope inevitably means some bases are left uncovered.

FSMA has put a spotlight on imported ingredients and brought managing the complexity of the supply chain to the forefront. Imported food is a necessary part of our supply chain, but a part which requires more diligence and new tools to ensure safety.

While food testing technology is adapting to plug the holes in our domestic food industry, the global supply chain is a much bigger ship. Fast, scalable, and comprehensive technologies are pertinent to assume the burdens regulations can’t address on a global scale, and help corporations and government agencies protect consumers.

The global food retail industry is growing faster than Moore’s Law, calling for a new level of technology, regulation, and organization to ensure safety. As the industry expands and evolves, isn’t it time we help brands committed to protecting their supply chain, and the consumers who depend on them?

Perhaps we cannot champion greed, but we can proactively stop its by-product from making it to our grocery store shelves. Food fraud may be a scam that’s withstood the test of time, but I’m confident that this generation of innovators, food safety experts, and savvy technologists will squash global food fraud once and for all.

  • As VP of product, Maria Fernandez Guajardo leads Clear Labs’ product strategy, product delivery, product marketing and sales enablement. She has over 15 years of experience on product management and marketing, engineering and business development. Prior to joining Clear Labs, Maria was VP of Products at RetailNext. Before that, she held multiple business and technology roles at Texas Instruments, notably in the software division for mobile application processors.

Related topics: Food Safety & Quality

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