Food Fraud: Challenges and Strategies

May 10, 2019/by Danielle Duffy

Food fraud has become an ever-growing problem that affects products and businesses across the
supply chain, and in the UK alone, it has been said to have cost industry over £11 billion, and as much as $40
billion in the USA.
Food fraud occurs when products are deliberately mislabeled or misrepresented, diluted, tampered
with, substituted, counterfeited, or subjected to unapproved enhancements.
The pronounced effect of this is that food fraud is a complex commercial and supply chain issue that
is not something that can be solved by a Quality or Technical department alone.

A brief history of fraud

There are many reasons why fraud occurs from a desire to increase profit margins or the product itself
being cheap and easy to copy, to unsatisfied market demands, and difficulties in detecting and proving the
providence of a good, which in some cases can make it easier to carry out.
‘Horsegate’, in 2013, was one of the most publicized cases that pushed food fraud to the forefront of
media attention in recent years.
When testing on frozen beef burgers first revealed undeclared equine DNA, it soon became evident
that affected products had been disseminated throughout the supply chain and resulted in several European
countries being affected in the fallout.
This fallout was significant, yet it was not the first, nor is it likely to be the last, instance of food fraud
on a significant scale that garners worldwide attention.
In separate instances, in both 2007 and 2008, melamine originating from China was found to have a
presence in pet food and baby formula, highlighting what can happen when the motivation of profit exceeds
product integrity.
When the motivation of profit exceeds product integrity… surely no economic gain can be worth such
an outcome.
Included to show adequate protein content after water had been added to raw milk to increase its
volume, the contamination with baby formula led to many illnesses and the deaths of 6 infants, surely no
economic gain be worth such an outcome.

What motivates food fraud?

Recent scandals such as these have further highlighted the need for companies to provide mitigation
strategies within their organizations and across their supply chain to help reduce food fraud.
Typically, it may be best practice to conduct a vulnerability risk assessment of the supply chain, which
usually includes looking at 3 main aspects: Opportunities, Motivations, and Mitigations.
For any given food product or ingredient, the nature of its composition, qualities, production process
and supply chain, as well as its geographic origin, determine the opportunity for fraud.
For example, it is generally easier to commit fraud on liquid products and complex foods with more
ingredients than simpler foods with fewer ingredients.
When assessing the opportunity of food fraud occurring to the product, questions that should be asked
include:
 How complex is the supply chain of the product?
 How robust is the security along the supply chain?
 How easily can adulteration be detected?
 What detection methods are available?

Perhaps, Professor Chris Elliot of Queen’s University Belfast, Ireland, put this best when he remarked that
“every time you have a transaction, there’s another opportunity to cheat.”
“Every time you have a transaction, there’s another opportunity to cheat.”
At its core, what this means is that food fraud can potentially occur at any stage in the food supply
chain, and we must be vigilant at all times to its potentiality.
Once an ‘opportunity’ is identified throughout the chain that fraud may occur, it is equally as important
to consider ‘why’ this might occur in the first instance.
Once an ‘opportunity’ is identified throughout the chain that fraud may occur, it is equally as important
to consider ‘why’ this might occur in the first instance.
Once the motivation for fraud can be considered, it can determine at which stage fraud will more likely
occur and what additional steps can be taken to mitigate against its occurrence.
Asking yourself the questions, how would you describe the economic conditions of your direct
suppliers and how would you rate the corruption level of your suppliers, will be a step forward in helping to
identify the motivation of food fraud through your supply chain.
 Basic economic motivation can be classified as one of the main reasons for food fraud and this can be
driven by revenue maximization or cost minimization.
Economic motivation can be driven by revenue maximization or cost minimization.
Once any motivation has been identified you need to put in place mitigation strategies to help prevent
this potential fraud from occurring.

Mitigation strategies for food fraud

The best prevention against food fraud is to anticipate the reasons why it may occur, both internal and
external, and to mitigate against them.
A necessity for a food business is to fully understand each of the stakeholders in the chain involved in
producing, storing, and distributing their food ingredients.
A common struggle for companies is Supply Chain Mapping, which is extremely relevant in paving the
way to help reduce food fraud.
Effective procurement, robust supplier approval, and supplier management are core elements to
minimize any potential supply chain risks.
Not only is the management of your supply chain vital, but a company also needs to start from within
their facility by looking at their food safety management system, management itself, and employees, which all
play an important role in reducing the risk of food fraud.
A company needs to start from within their facility.
It’s important to consider employee integrity screening and an ethical code of conduct, and to not
forget that employees and staff are at the forefront of production every day.
Those at the front line need to be comfortable if they see anything abnormal happening, i.e., potential
food fraud, that you as a company have policies in place that protect them if they come forward to discuss.
Being able to track your raw material right from the beginning of its life and knowing the supply chain
between then and when it arrives to you is also paramount, so an effective and strong traceability and mass
balance system should be in place as well.
A robust supplier approval process is key, and it is important to really think about what standards you
want your supplier to have.
This was previously discussed in one of our more recent blogs (What criteria can you use to risk
assess your suppliers?), and it should take into consideration their ethical code of conduct.
Going further, you may also want to consider if there are any whistleblower policies in place, even if
this means asking questions to staff during an audit to help assess whether they may think any strange
activities may be happening.
Lastly, along with the above, we cannot forget raw material monitoring and testing (with a
representative sample) is an important aspect in the fight against potential food fraud, although this may not
always be easy.
Testing may not always be easy, and can be expensive, time-consuming and a large representative
sample would be required to just rely on this strategy alone.

Food fraud in the future

I believe it is safe to say at this moment there are industry-wide challenges when it comes to the
detection of potential food fraud.
It is certain that food fraud is an ever-growing concern for all those involved in the food industry, and
can occur at multiple points and from multiple sources, with a wide array of motivations.
Widespread opportunity, adulteration and deception, as well as the ever-growing complexity of the
supply chain, makes our lives somewhat more difficult, but equally as rewarding.
Widespread opportunity makes our lives somewhat more difficult, but equally as rewarding.
Those committing food fraud are criminals and deception is their main goal, so they will do everything
they can to hide that this is happening, and therefore, this will make it more challenging.
We need to be vigilant and determined within the food industry to fight against this fraud and we need
to learn from previous public food fraud cases, I would imagine that no one would want to face the
repercussions of such a scandal to their company and damaging effects to consumers.
An article I read previously stated ‘Criminals are smarter than Salmonella’, and at this moment in the
food industry, this is probably something many could agree with.
One mitigation strategy alone will not help to combat this fight, but rather a multi-faceted proactive
approach, transparent systems, and constant vigilance is required at all times.
What criteria can you use to risk assess your suppliers?

November 27, 2018/by Annemarie Joyce

Enforcement of new legislation such as the Food Safety Modernization Act (FSMA), and new
requirements from GFSI standards such as BRC, has placed increased pressure on food companies to fully
know their supply chain.
This means that supply chain risk management has become an area of increased attention for food
companies in recent years.
Other factors such as recent food fraud incidents, the most notable arguably being the horse meat
scandal in 2013, are increasing the need for a secure, safe and an authentic food supply chain.
Sourcing of food and ingredients from across the globe is a growing trend as businesses are no
longer limited to the first-tier supplier, manufacturer or distributor.
The result of this is that the food industry’s supply chain continues to evolve and grow in complexity.
This might mean that it is likely that one or more ingredients in a given product could be sourced from
non-domestic entities.
The consequence of this is that the number of agents or brokers found in the supply chain has
increased and need to be accounted for.
This means that the potential of risk in the supply chain has increased, and that, in order to be most
effective, a business needs to be more vigilant in how it risk assesses its suppliers.

Potential risk added as complexity of chain increases

Facility
Broker Retailer
Facility Broker
Supplier YOU Distributor Retailer
Facility Agent
Agent
Retailer
Facility

Risk Risk Risk Risk Risk Risk

The current status of your supply chain

The burden of requiring businesses to conduct risk assessments for all suppliers and materials has
increased over the years.
A lack of an understanding of potential risks may lead to food safety and quality failures, and
potentially result in damage to all companies exposed to the risk, both in terms of customer confidence and
monetary value.
Therefore, it is wise that businesses risk assess suppliers before they receive materials, so as to
mitigate against the likelihood of being affected by an unsatisfactory product.
Think of suppliers as being an extension to your company
When doing so, it’s important to think of suppliers as being an extension to your company, as if there
is a risk in your finished product, your customer may not distinguish between where the fault originated and
who was responsible.

Options for Supplier Risk Assessment

When assessing suppliers, the 2-Dimensional matrix of Probability by Severity fails as it does not
cover the multiple criteria that impact on the risk of a supplier and its products in the supply chain.
This type of risk model has a high degree of uncertainty and limits, whereas a criteria-based model
can be considered a more robust approach with lower levels of uncertainty while allowing for multiple risk
criteria.
When defining the criteria for supplier risk assessment, one should think about the type of supplier
they have.
When defining the criteria for supplier risk assessment, one should think about the type of supplier
they have
 For example, you may need to have different criteria for an ingredient supplier compared to a
packaging supplier.
As the considerations for each vary, below is an example of some of the key aspects one should keep
in mind when considering their risk assessment strategy.

GFSI/Other Certification:
A good starting place when determining your risk assessment is to consider if the supplier has
achieved a 3rd party certification standard such as GFSI, which is now becoming a common requirement
when doing business throughout the supply chain.
Generally, this is a common criterion which can be used when risk assessing your supplier that may
save time and resources.
Knowing that your supplier is working to the requirements of a standard can be reassuring as it should
indicate that they will be supplying acceptable materials while protecting public health, and if not, well, the risk
associated with conducting business with that supplier will need to be considered.

Supplier or facility from a country with a high-risk rating:

If a supplier is from a high risk rated country, the likelihood of fraud could increase.
Of course, to give an answer to each criterion you need evidence and be able to provide a justification for your
answer.
To help in determining this answer, you could endeavor to use fully objective data where possible.
In these instances, referring to the Worldwide Governance Indicators to see what countries present a
higher risk may be beneficial, especially when knowledge of the area within the organization is lacking or
altogether absent.

History of Food Fraud:

If a supplier has had a history of food fraud it may be likely to happen again.
Therefore, integrating the history of food fraud implication into your risk assessment model for
suppliers may also be a pragmatic step to consider.

Annual volume of purchased materials:

The greater the volume of materials to be supplied, the greater the exposure to an organization could
be, should an issue arise.
As dependency increases, whether it be for a scarce, proprietary or key product or material, or simply
due to the ease of relationship between the organization and supplier after a history of uneventful supply, this
should be borne in mind to mitigate against the risk in the event of an issue occurring.

Additional allergens present in the facility:

It can also be prudent to consider whether your supplier has additional allergens handled in their
facility compared to yours.
If they have peanuts, for instance, and you do not have this as an allergen in your site, then there
could be a risk of this allergen arriving in the material they will send you and you distribute to your customers.

Food Defense Plan:

Considering whether or not the supplier holds an efficient food defense plan may also be wise.
If a supplier has procedures in place to prevent intentional contamination and has protocols in place to
quickly identify and control threats or acts of intentional contamination, this will lower the risk of the supplier.

Recall/Alerts in the last 24 months:

Measuring the number of recalls, alerts, notifications, withdrawals and/or sanctions over a recent
period may indicate the level of risk with a particular supplier.
Recall of products can have significant effects on other parts of the supply chain and so risk can be
spread through the supply chain.

COA/COC:
Consider if the supplier issues certificates of analysis for each delivery of materials.
If they do not, then this can add to the supplier’s risk.

Factors to considering different criteria:

As mentioned earlier, an organization may have different criteria depending on the supplier type.
A criterion specific for a meat supplier would be integration, i.e., is the facility fully integrated or is the
slaughterhouse/cold store external?
If a facility is not fully integrated, the entities among the supply chain increase and so too will the risk
of the supplier as more control is needed to ensure the integrity of the product.
 Another supplier specific criteria (again for the example of a meat supplier) would be species.
A multi-species supplier site with shared production lines would carry a higher risk than a designated
line per species or a single species site.
For a supplier of packaging, you also need to create your own criteria for risk assessing them.
For example, is the supplier a primary or secondary packaging supplier.
Of course, if they are a primary packaging supplier the risk to your material, if there is an issue, is
much higher as it will be in food contact.
For a packaging supplier, you may also have a criterion called foreign body control program.
If your supplier doesn’t have a programme in place, then this will add to their risk as a supplier.

GFSI / Other Certification COA / COC

Has the supplier / facility Does the company issue
achieved some 3rd party certificates of analyses
certification? or conformance?

Facility from Country with

High Risk Rating
Involves referring to public
databases on the history of
food safety from particular
countries or regions
including likelihood for food
fraud.
  Recall / Allerts in last 24
months
Measuring the number of
recalls, alerts, notifications,
 withdrawals, sanctions
CRITERIA  over a recent period may
indicate the level of the risk
with a particular supplier

History of Food Fraud   Food Defense Plan

Integrating the of food fraud Does the company hold an
implication in the RA. efficient FD Plan?
 
Volume of Purchased Materials Allergen Controls
Integrating exposure into RA. The Are additional allergens
greater the volume the greater the handled in the facility?
exposure should an issue arise.

For the list of criteria above some may be considered more important and hold more weight than
others.
For example, if a supplier doesn’t have a GFSI cert, and if a supplier doesn’t provide Certs Of
Analysis, you might decide to consider the fact that the supplier doesn’t have a GFSI cert as much more
important than them not providing Certs Of Analysis.
In this instance, you could, therefore, assign risk values to criteria and weight them.

Criterium Criterium Criterium Risk

1 + 2 + 3 + Criterium
4 =

Once you risk assess your supplier, you may need to put controls in place to mitigate the risk the
supplier poses.
High-risk suppliers may require more information and diligence for approval or even an onsite audit.
Once your supplier has been risk assessed and approved, then you can turn your attention to risk
assess the materials they will provide you.
Again, using a criteria-based risk assessment model, you can risk assess your materials.
For example, does the material have a history of substitution or adulteration?
 For these particular criteria, you could refer to objective data from sources such as HorizonScan.
Other criteria for material risk assessment might include, the country of origin of the material, is there
a vulnerability assessment for the material and are there hazards in the delivered material expected that need
controls.

The importance of continuous assessment

The bottom line is that a company’s reputation may be tarnished if there is an issue that necessitates
a product recall.
Ensuring suppliers are risk assessed regularly will significantly reduce the risk of you inadvertently
approving a supplier which could cost you in the long term.
Think of it this way, your supplier’s risk is also your risk.
With this acknowledged, it seems the shift towards multi-criteria-based assessments over a simple
matrix will continue and the number of risk assessments on a given supply chain will continue to increase as
well.
Moving forward, it would be prudent for an organization to streamline their supplier assessment
workflows starting with data collection, risk assessment, risk mitigation, and reporting.
It would also be worth considering using supply chain maps and dashboards wherever possible to
enhance reporting in regard to suppliers.
Lastly, it is good practice to keep all supplier data in one database to ensure that there is one version
of the truth.
Keep all supplier data in one database to ensure there is one version of the truth
Software such as Safefood 360° allows you to assess your suppliers and keep all records in one
quick-to-access location.
You can create linkages between suppliers and the materials they provide you and of course use
criteria-based risk assessment models to risk assess your suppliers.
This will allow you to access supplier information with just one click, and will also allow for greater
visibility and traceability, which is becoming such an important factor in the food industry due to regulations.
Ultimately, what is most important is that whatever system you prescribe to, allows your organization
to act with confidence in the market and put forward the most secure and safe product possible for your
customer.

Fonte: https://safefood360.com