Feature

Delicious or deceptive? Food fraud's economic and safety costs

Experts say fakes cost the industry up to $40 billion a year and the problem is difficult to solve

Economically motivated adulteration of food, what most people would call “food fraud,” has been estimated to cost the food industry $30 to 40 billion per year.  

Michigan State University’s Food Fraud Initiative defines food fraud as “a collective term used to encompass the deliberate and intentional substitution, addition (or dilution), tampering, or misrepresentation of food, food ingredients, or food packaging; or false or misleading statements made about a product, for economic gain.”

John Spink and Douglas Moyer, assistant professors at Michigan State University, and leaders of the Food Fraud Initiative, have identified seven distinct kinds of food fraud:

Adulteration: A component of the finished product is fraudulent.

Tampering: Legitimate product and packaging are used in a fraudulent way.

Over-run: Legitimate product is made in excess of production agreements.

Theft: Legitimate product is stolen and passed off as legitimately procured.

Diversion: The sale or distribution of legitimate products outside of intended markets.

Simulation: Illegitimate product is designed to look like, but not exactly copy, the legitimate product.

Counterfeit: All aspects of the fraudulent product and packaging are fully replicated.

“There has been a switch in focus from how to detect it to how to prevent it, and that’s going to be big in 2017,” Spink told Food Dive. “That’s really what the Global Food Safety Institute has been working on: setting up new food safety management systems that are really focused on preventing it in the first place.”

Peter Bracher, managing director of food safety management for NSF International Asia-Pacific, noted food fraud is still a growing problem worldwide.

“In 2017 the drivers for food fraud remain the same, and although there’s been some good new initiatives related to DNA and isotope testing and some useful additions to the leading global food safety certification schemes related to food fraud prevention, we don’t yet have a single effective solution to prevent food fraud,” he told Food Dive.

Food fraud is a business that is often driven by the opportunity to make money. Any higher value products that can be substituted or diluted with a lower cost item are vulnerable. 

Bracher said that while food fraud has probably always existed at some level, there has generally been a lack of acceptance of the need to view it as a serious crime — as well as a food safety issue.

Problem areas

Food fraud can take all forms. There have been some recent cases of rice that was made from plastic and starch in Africa, and there was another recent case where a rare single-malt whisky was found to be fake

But many suspect these cases are just the tip of the iceberg, and undetected issues occur in all countries. Especially because any type of product that is graded—like Angus beef—can be fraudulent because it's impossible to tell if it was grass-fed just by looking at it.

Here are some popular forms of food fraud.

Cheese

According to government statistics, the Italian hard cheese market in the United States — which includes both domestically produced and imported products — is approximately $3 billion. 

Of the estimated 463 million pounds of Italian hard cheeses sold in the U.S. each year, 20% of the overall pound volume is fake, said Neal Schuman, CEO of industry leader Schuman Cheese. That accounts for roughly $375 million of sales of adulterated cheese.

“There have been various forms of adulteration going on for many years,” he told Food Dive. “It probably fell on deaf ears and blind eyes because we didn’t have the type of consumer movement for transparency and for quality that we currently have today.”

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This is a major concern for the grated/shredded domestic Parmesan and Romano cheese market. Schuman estimated the fake Italian cheese business is growing by as much as 10% a year, and has been escalating for about five years.

“It’s not uncommon to go to a supermarket and find a canister of grated cheese with 21 to 25, or 30% non-Parmesan material, or more sometimes,” he said. “The way people go about lowering their cost is to find ingredients that cost less than the cost of their cheese, and those ingredients are cellulose, starches, vegetable based and cheese analogues.”

He said the industry’s first call to action is to let everybody know what the standards for Parmesan and Romano cheeses. On the sensory side, Schulman noted true cheese shouldn't taste overly salty, milky or sugary, and it shouldn’t be too gritty.

To help consumers make better choices, Schuman Cheese recently announced the industry’s first trust mark—True Cheese. The seal is intended to validate quality and compliance with standards. Products bearing the mark are independently tested and verified by Covance Food Solutions, a Madison, WI.-based food testing laboratory.

Honey

Honey is another common product ripe for fraud. The product is often marketed as made in the U.S., when it really originates in Asia.  A 2011 Food Safety News investigation documented that millions of pounds of honey deemed unsafe in other countries were being imported and sold in record quantities in the U.S.

Bracher said since then, the honey industry has introduced laboratory testing to determine the origin of honey, together with a system of security seals and traceability programs to ensure that consumers are getting what they pay for.

Spink said that when it comes to honey, sometimes the complexity of the science can get in the way of determining is a sample is really fake or not.

“A lot of purity tests are tested on raw honey but once it’s processed, some of the enzymes are changed,” he said. “If you do the same authenticity test on processed honey, it may not show it has the same required attributes to be authentic. It doesn’t mean it’s fake honey. Sometimes we see claims of fraud when it’s really a misapplication of the test by the inspector.”

Seafood

Seafood fraud can come in many forms, with species substitution being the most notable. This involves replacing a more expensive or desirable fish with a low-value or less desirable seafood item.

In a 2013 Oceana study, 1,200 seafood samples were analyzed from 674 retail outlets in 21 states using DNA testing, and more than 33% were found to be mislabeled. That included high-mercury tilefish, which was being sold as halibut or red snapper, and grouper mislabeled as king mackerel.

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Other examples of seafood fraud come from improper labeling, including hiding the true origin of the seafood products. Other times, extra breading, water or glaze is added to seafood products to increase their apparent weight.

“Seafood fraud is a serious global problem that undermines honest businesses and fishermen that play by the rules. It also threatens consumer health and puts our oceans at risk,” said Dustin Cranor, communication director at Oceana. “Without full-chain traceability for all seafood, consumers will continue to be cheated, hardworking honest fishermen will continue to be undercut, and the long-term productivity of our oceans will continue to be in jeopardy.”

Olive oil and spices

Blended items, including spices, can be fraudulent because it is difficult to tell the components and their origins just by looking, Spink said.

“Wherever the claimed origin of a food product adds to the value of the product, then there’s an increased risk of fraud,” Bracher said. “Olive oil from a specific country such as Greece is favored by some consumers and so they will pay a premium, so this creates an opportunity for fraud.”

The problem, Spink noted, is the crime is not always worth the government’s time to investigate.

“With olive oil, let’s say it’s Greek olive oil but labeled as Italian olive oil," he said. "How much is it worth the government to investigate that? If no one got sick, there’s not the resources to do much about it.”

Differentiating between the real thing and imposters

Bracher noted that the leading food safety certification schemes, such as the global standard British Retail Consortium (BRC), have been adding new requirements to make an assessment of fraud vulnerability an essential part of the certification process. 

“The traceability organizations that develop bar codes have also been helping to develop more sophisticated traceability systems,” he said. “At NSF International, we have been developing forensic accounting techniques to enhance our routine auditing, and also looking into how shared ‘big data’ on production and selling volumes can help to identify fraud.”

It is equally important for retailers to partner with only reputable suppliers and manufacturers who have a plan in place to deter, detect and monitor all food chain supply activities on an ongoing basis. Retailers should confirm with suppliers that their products are safe and have not been exposed to adulteration of any kind. They should also work with supply chain partners to minimize the impact of problems through timely and coordinated communication and efficient product recall efforts.

“Consumers also play an important role and can demand higher food safety standards and support retailers and manufacturers who have food safety standards in place and communicate those standards as assurance to the consumer,” Bracher said. “Addressing food fraud takes a worldwide coordinated effort between industry, consumer groups and governmental agencies.”

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Filed Under: Manufacturing Ingredients Packaging / Labeling Policy
Top image credit: Flickr user USDAgov