Expanding Sustainable Food Market Brings Greater Fraud Risks

The growing market for sustainable and premium foods is bringing greater risks of food fraud. Ecovia Intelligence believes that the way forward is greater transparency in supply chains, with new technologies and global alliances playing an important role.

The beef scandal in Brazil earlier this year highlighted the economic impacts of food fraud. The trade ban is estimated to have cost the Brazilian meat industry over US$4 billion in lost revenue. More critical than lost revenue, research shows there are also health (food safety) and environmental impacts of food fraud. According to the World Health Organization (WHO), almost one in 10 people fall ill from eating contaminated food each year.

According to Mr Amarjit Sahota, President and Founder, Ecovia Intelligence, organic and eco-labelled food products face a high risk of food fraud because they command a premium price. Although at a relatively low occurrence rate, a number of incidents of mislabelled organic foods are coming to light. In May 2017, it was reported that a shipment of 36 million pounds of corn and soya beans into the United States of America (U.S.) were falsely labelled as organic. Starting off from Ukraine, the conventional ingredients shipment increased in value by about $4 million (by obtaining organic status) when it arrived in California via Turkey.

Mr Sahota says that Ecovia Intelligence sees Asia as the region most at risk from food fraud. “There are two reasons. The first is that the organic and sustainable foods market is showing high growth in Asia; the price premium given to such products attracts fraudulent behaviour. The second reason is absence of controls and/or regulations. Unlike Europe and North America, the organic food market in most Asian countries is not regulated. It is therefore very easy for companies to mislabel food products and not face any penalties (as they do in other parts of the world).”

“Mislabelling of sustainable and premium products is rife in Asia. Some operators are making false organic claims on food products because of the lack of regulations and/or enforcement. India, the country with largest number of organic farms (0.6 million), has no laws preventing such fraudulent claims. According to a recent report by the Indian Council for Research on International Economic Relations, the absence of such regulations is eroding consumer trust,” he said.

The Brazilian beef and the European horsemeat scandals highlighted the vulnerabilities in supply chains of food products. In general, the longer and more complex the supply network, the greater the risks of food fraud. Transparency is coming to the fore, partly because consumers are keen to know about product origins, production methods, and sustainability credentials. Technology is playing an important role, with smart labels and mobile apps meeting the informational needs of consumers. In the United Kingdom (UK), the Soil Association has partnered with the technology firm Provenance to provide smart labels on organic food items. QR codes, barcodes, and NFC tags, are enabling consumers to track organic food products from farm to fork.

Technology is already being deployed to test for food authenticity and to detect fraud. Analytical tools, such as mass spectrometry and gas chromatography, are being used to authenticate premium products, such as Manuka honey, basmati rice, and extra virgin olive oil. Forensic techniques, such as DNA fingerprinting, are now making their way to food labs to check product samples.

International alliances are being formed to tackle food fraud. Announced recently, the EU-China-Safe project has European and Chinese organisations partnering to improve food safety and tackle food fraud. As well as providing safer, authentic food, the initiative aims to boost consumer confidence and facilitate food trade between the EU and China.

Such alliances are necessary to combat food fraud. A concern, however, is that as more fraud cases come to light, a casualty may be consumer trust in sustainable foods. In this respect, prevention – rather than cure – may be the best course of action for the sustainable food industry.

Food Fraud Workshops
Ecovia Intelligence is hosting dedicated workshops on food fraud and authenticity at the upcoming editions of the Sustainable Foods Summit. The workshops will be led by Andy Morling, Head of the National Food Crime Unit, Food Standards Agency UK.

The aim of the Sustainable Foods Summit is to explore new horizons for eco-labels and sustainability in the food industry by discussing key industry issues in a high-level forum. The Asia-Pacific edition will take place in Singapore on 28-30th November. More information is available at www.sustainablefoodssummit.com.

Ecovia Intelligence (formerly known as Organic Monitor) is a specialist research, consulting and training company that focuses on global ethical product industries. Since 2001, we have been encouraging sustainable development via our services portfolio: market research publications, business and sustainability consulting, technical research, seminars and workshops, and sustainability summits. Visit us at www.ecoviaint.com.