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January 17, 2022

Food fraud in the supply chain (and how to fix it)

While global food supply chains already face extraordinary pressure from a series of challenging headwinds, the worldwide proliferation in food fraud demands the sector’s urgent attention.

It was already a serious issue before the pandemic, but the rise in global food fraud has increased substantially since Covid struck in 2020. Cases of adulteration – meaning that a food product fails to meet the legal standards – have increased globally by 30%, while counterfeit incidents have risen by 47%, according to the Food Authenticity Network.

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The knock-on effect scores to undermine consumers’ trust in the food sector. So how can this be overcome? There are a number of measures the industry can take to further mitigate food fraud on a global scale, including the use of blockchain and other innovative technologies to track food throughout the supply chain, but the role of expert quality assurance managers in combatting food fraud has also become increasingly pertinent.

Serious consequences

“Food fraud is a massive issue that many countries and companies are grappling with. The biggest risk to consumer due to this issue is health – and some very serious consequences to the global economy,” says Sumit Chopra, Director Research Analysis and APAC Commercial Director for GlobalData.

Food fraud can have multiple avenues, says Chopra, but the key ones are:

  • Adulteration: a component of the legitimate finished product is fraudulent
  • Tampering: a legitimate product and package are used in a fraudulent way
  • Diversion: a legitimate product is distributed outside of intended markets
  • Simulation: an illegitimate product is designed to look like but not exactly copy a legitimate product
  • Over production: a legitimate product is made more than production agreements

All the above can lead to multiple consequences. “Formulas may include harmful ingredients that damage consumers’ health. Illicit products with identical appearances to genuine ones will not have gone through necessary and sufficient checks for quality control before being released in the market. Pack design is stolen to create copycat brands, which can potentially steal market share and undermine the image and reputation of legitimate brands. Financial losses are caused by brands paying to produce legitimate products but find that their sales are depressed due to illegal copycats,” says Chopra.

“Apart from the long-term affects to our health, it is also damaging to consumer trust and longer-term, government trust, as they are who we look towards to create a legal process around food production and sale,” says Paula Kirwan, General Manager, Australia (East) at Brunel Australasia.

“There is usually a commercial benefit to food fraud and by the time one fraud is detected the fraudsters will have moved to another scam. With so many opportunities to commit food fraud, the industry is seriously exposed to the de-valuing of its product – and brand.”

Ultimately, loss of consumer trust can have massive impact on brand reputation, says Chopra. “If it emerges that the claimed product benefits are not what the consumer is getting, this will massively impact consumer loyalty. Public health risk will also be a fallout. If non-approved food products or ingredients or lack of transparent information on use of various undeclared substitute cannot be controlled or tracked, then all of this can cause massive problems.”

Kirwan agrees. “If we cannot trust what we purchase within the food industry then the impact can be harmful to our long- term health and food innovation, such as e-commerce,” she says. “The food supply chain is increasingly global, therefore labelling and source referencing become paramount to the consumer. We are currently experiencing a rapid growth in e-commerce food – particularly during the Covid pandemic – and this is much more vulnerable to food fraud. The lack of face-to-face contact with traders and no opportunity to inspect products before purchase puts the consumer at risk. For food markets to develop the consumer must absolutely trust that all aspects, from paddock to plate, are heavily legislated and compliant.”

Measures to combat food fraud

Thankfully though, there are various ways in which this can tackled, however many of the solutions will be a “function of the overall food ecosystem” according to Chopra. “In essence, smart packaging is one of the best solutions that companies have started adopting to counter food fraud. If we consider the adulteration issue, a good track and trace system becomes a must-have feature should supply companies wish to reassure clients about the quality and source of their goods, as well as fight against counterfeits,” he says.

Moreover, as consumers have raised awareness towards food and product safety due to recent food safety scandals around the world, having such traceability is also welcomed, and often demanded by the public. Similarly, in the case of counterfeiting, a simple scan approach will allow consumers to check a product is genuine before purchasing. “Anti-counterfeiting packaging solutions for consumers should be kept simple and non-sophisticated,” says Chopra.

“When shopping, consumers look for easy-to-identify but authoritative evidence to determine whether the product is genuine or not. Security codes, such a QR codes, and holograms labels are so far the most popular anti-counterfeiting packaging solutions for consumers. However, these features can provide so much more than just authentication. They can also improve brand communication, strengthen consumer trust, and serve as a mechanism to enhance brand awareness.”

In terms of future, action steps – there are few areas to consider, says Chopra. Consumer-oriented anti-counterfeiting technology that is affordable and easily accessible is key. “Consumers are the biggest victims of counterfeiting in consumer goods, facing financial loss, damaged health, or even life-threatening consequences. As product safety awareness rises among consumers around the world, the demand for consumer-oriented anti-counterfeiting technology and services will go up. The growth is driven by consumers taking the initiative to protect themselves from counterfeits. Such technology should be made affordable and easily accessible to avoid consumers being put off by price.”

Adulteration remains a key issue faced by various stages of the supply chain, but it could be solved by giving certification to trusted businesses, says Chopra. “Adulteration continues to pose a threat to every stage of the FMCG supply chain. Although technologies such as track-and-trace system can help minimise the chance of adulterated ingredients being made and circulated, identifying fraudulent ingredients remains a challenge due to the complexity and scale of the process. In addition to utilising technology, working with trusted partners who have been certified as credible ingredient suppliers or manufacturers is one possible solution.”

Chopra also reasons a future improvement would be the adoption of an integrated blockchain system that allows everyone to view how a product has travelled from farm to shelf. “Having high transparency and traceability across the FMCG supply chain is crucial for anti-counterfeiting. There are already various types of anti-counterfeiting technology on the market, but the market is looking to implement blockchain for entire supply chains to track where and when products are made, stored, and handled. This allows greater transparency for both businesses, consumers, and the public.”

Blockchain technology shows early promise in improving traceability and transparency of food supply chains, according to Kirwan. “Blockchains can assist in providing an unchangeable record from the creation to the retail store of a product. As such it could be efficient in preventing operators in the middle of the supply chain from changing the description of a food product, such as mislabelling horse meat as beef, but it would not prevent the first person inputting the original data into the blockchain from fraudulently defining the product at the start. Blockchains can also be expensive to operate, and for full traceability, require the different blockchains of different companies to work together,” she says.

“As such, blockchains do not offer a silver bullet to combat food fraud and more general issues of traceability, but when applied carefully and combined with inspections to verify the quality of original information, can increase the transparency of supply chains and consumer trust.”

Innovate to stay ahead

Food fraud, says Kirwan, is a continuous race between food fraudsters who devise new ways to defraud their customers, and officials and buyers who try to catch them. Fraudsters hold an unfortunate edge in this race, as they are free to innovate any possible ways to increase their profit, with no concern for the well-being of consumers. To deal with this, legal interventions alone are not enough, and innovative technologies can go a long way to breach the gap,” she says.

“Traditionally, access to laboratories has been a requirement to detect whether some food products have been adulterated and are fraudulent. This is costly, both monetarily and time wise.”

The recent development of portable testing devices, through funding from both the private sector and governments, may reduce both costs, says Kirwan. “Thanks to recent developments in miniaturisation technologies, AI-driven machine learning and general increases in computing power, it is now possible to build portable devices utilising infrared, ultraviolet and visible light, or Surface Enhanced Raman Spectroscopy sensors. Use of such relatively cheap portable devices would move testing from the laboratory to the field and enable risk-based sampling. Using a variety of detection technologies, with different sensory capabilities in changing combinations, would make food fraudsters’ jobs of finding weaknesses in any individual method more challenging.”

The real functionality of the portable devices, says Kirwan, would be dependent on the reference database against which they would reference the results from analysing the samples. “To be as effective as possible, and accessible to officials and private parties alike, such reference databases could be centrally held by an independent institution or organisation. This naturally carries rather significant costs. Secondly, the quality of the data, both from authentic products and from adulterated ones, fed into such reference databases, may be the reason for the database’s failure or success. With good data, these databases and devices can create accurate profiles of authentic products, against which samples can be compared. Conversely, low-quality data results in overall inefficiency of the database.”

Kirwan also cites the use of DNA barcoding, which has seen success when used to identify fish, as a promising and potentially very accurate method of identifying the species and detecting cases of food fraud by substitution. “For fish identification, DNA barcoding works by using a short genetic sequence of mitochondrial DNA to identify the fish as belonging to a particular species. This very useful method can be used on both raw and cooked products,” she says.

Another technically advanced method for establishing food authenticity is the variety of techniques under the umbrella of nuclear techniques, including the analysis of stable isotopes and trace elements, and profiling volatile organic compounds, says Kirwan. “Stable isotope analysis combined with trace element analysis can be a very accurate way to link a food product to the environment or location where it was produced and the agricultural methods that were used during its production.”

While this method can be very accurate, it is both costly and requires a high level of expertise to undertake, according to Kirwan. “As with the simpler portable devices, the results are only as good as the comparison data available in reference databases. Another robust method that provides ideal application to detect food frauds is Nuclear Magnetic Resonance spectroscopy, which can rapidly analyse mixtures at the molecular level without requiring separation and or purification steps. The fact that a broad spectrum of ingredients can be tested at once allows for both on-targeted detection and for quantification of dozens of substances in a few minutes. The success of the application of this technique largely relies on the availability of sufficiently populated databases.”

Assuring quality

Kirwan believes more attention on one specific profession in the industry can also reap rewards. “Legal frameworks can, and often do, place the primary responsibility to prevent fraud on food business operators, such as through traceability requirements and requirements to adhere to good agricultural practices and good manufacturing practices,” she says.

“A quality assurance (QA) manager in any food manufacturing facility is responsible for the controls and processes that underline this good practice and any legal framework.”

Food safety has, say Kirwan, significantly benefited from the adoption of the Hazard Analysis and Critical Control Point (HACCP) principles. Similar gains in the fight against food fraud could be achieved by the adoption of the Vulnerability Analysis and Critical Control Point (VACCP) system. Following the VACCP principles, a food business can develop documented procedures to identify and mitigate the risks of food fraud in their supply chains. A VACCP system would typically consist of drawing up a list of all ingredients and materials used in the manufacturing process; identifying potential forms of fraud they may be subject to; evaluating the risk of fraudulent practices; identifying and implementing control measures; and recording and reviewing findings.

“These responsibilities typically fall under the control of the Production Manager and QA at a food manufacturing facility. The skills required are becoming far more scientific based as we move away from traditional compliance towards a more digital approach to food production and assurance,” says Kirwan.

Brunel can help in that regard because it works closely with a diverse range of facilities, from agriculture to e-commerce, and understands at what point food fraud can occur and have gained an understanding of best practice. “We know which organisations will provide the latest, innovative training for your career development and who has adopted the latest technologies in preventing food fraud,” says Kirwan.

Further details:

For more information, please visit brunel.com.au

Free Whitepaper
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Growing your workforce: Key focus areas

Numerous industries are suffering global labour shortages, meaning recruiting and retaining the right talent is more crucial than ever. But with trends like market internationalisation and ever-changing regulations continuing to cause disruption, it can be difficult to know where to start. When it comes to workforce expertise, from mining to life sciences, look no further. This whitepaper outlines the major challenges facing businesses as they aim to put together the best workforce and presents the key strategies that will enable them to thrive. Discover recruitment expert Brunel’s step-by-step guide to attracting and retaining talent and developing a strategic workforce plan. With the right partner, businesses can find the people, skills and outcomes they need to successfully navigate today’s markets.
by Brunel
Enter your details here to receive your free Whitepaper.

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