Food fraud is a growing problem. When consumers pay a premium for certified organic produce and packaged foods, they should feel confident that they’re getting what they pay for: a product free from synthetic fertilisers, pesticides, antibiotics, growth regulators and genetically-modified organisms. There is also an underlying ethical assumption that those revenues are going to farmers engaged in sustainable agricultural practices that promote ecological balance and conserve biodiversity.
Products sold as organic must, by law, follow certain standards – both European and national – and have to be regularly inspected and certified by approved bodies. At a global level, many countries have regulatory requirements similar to those in the EU and there are formal agreements covering trade in organic products between these countries
However, because organic and eco-labelled food products command a higher price, instances of food fraud, such as adulteration and mislabelling, are becoming more commonplace, resulting in consumers being misled and overcharged. What’s more, failure to enforce standards can cast a shadow over the term ‘organic’ itself, which should be synonymous with authenticity.
Staying competitive and relevant
The problem is amplified with imported products that involve intermediaries, some of whom are looking to make economic gains by deliberately mislabelling foods as organic and selling them at a premium. One example is the 2016/2017 shipment of over 16 metric tonnes of soybeans that found their way to California from Ukraine via Turkey.
What started out as conventionally-farmed, pesticide-treated soybeans under-went a remarkable transformation to ‘organic’, which saw the consignment’s value increase by US$4 million. This wasn’t a one off: two further shipments of corn and soybeans revealed similar findings. And because these imports were largely destined for animal feed, they would be likely to infiltrate the supply chain through a variety of foods including ‘organic’ eggs, dairy, meat and poultry.
Meanwhile, brands are finding themselves at risk. While consumers increasingly scrutinise labels for farm-to-fork provenance, not all retailers can verify organic products back to the point of origin due to a lack of upstream supply chain visibility.
While tier 1 and some of tier 2 suppliers may be known, the view of tier 3 and beyond is often obscured. Tackling the root of the problem
In April 2017, imports of organic products into the EU became subject to a new EU electronic certification system, to reduce potential fraud and provide more comprehensive statistical data on organic imports. As well as the goal of reducing organic food fraud, the addition of import certificates to the existing Trade Control & Expert System facilitates trade by enabling partners and competent authorities to easily obtain information on the movement of their consignments.
Forward-thinking companies, however, look beyond the ‘stick’ of regulation to the ‘carrot’ of consumer trust, and are actively seeking ways to reduce their susceptibility to organic food fraud and protect their brand. They need to account for every part of the production process, which means farming practices, distribution paths, storage procedures and product delivery must all be made visible to business managers.
External traceability is vital to validating the presence of attributes such as organic certification for the entire agro-food sector, which includes animal feeds. This requires all parties in the supply chain to systematically link the physical flow of materials and products with the flow of information about them.
However, many traceability systems today were only designed for internal purposes, providing an one-up, one-down view for the company using that system. Many companies, particularly those that do business with large retailers that impose strict standards, will quickly find themselves outgrowing manual methods or standalone software for batch/lot tracking. At this tipping point, an ERP solution that supports strong batch/lot traceability features becomes a must-have.
A fresh focus on traceability
With traceability-focused software, the product’s batch/lot number follows it from seed to table. By capturing the organic certification data as part of lot tracking, organic status can be tracked through the supply chain. For example, a bottle of certified organic wine should be traceable back to the exact vineyard from which its grapes were harvested.
An organic apple should be able to be traced back to the farm where it was grown, and it should even be possible to pinpoint the exact orchard from which it was picked.
This traceable chain of custody is what empowers consumers to trust certified organic brands. Shoppers are becoming increasingly savvy about what they eat and how it’s raised; wherever there is opportunity for differentiation by helping the consumer understand where their food is coming from, it should bear fruit in the form of customer loyalty based on confidence, not blind faith.
What is food fraud?
Food fraud refers to the deliberate adulteration, substitution, tampering, or mislabelling of food products for economic gain. Some examples of food fraud include:
– Diluting or substituting ingredients with cheaper alternatives (e.g. adding water to liquids to increase volume)
– Intentionally mislabelling food contents or origin (e.g. claiming something is “organic” when it’s not)
– Not declaring allergens or ingredients accurately
– Artificially enhancing colour or flavour to mask quality issues
– Tampering with expiration dates to move older product
– Counterfeiting or copying packaging and branding
– Knowingly selling recalled or unsuitable goods
– Misrepresenting GMO or antibiotic status of ingredients
Perpetrators commit food fraud to increase profits by cheating buyers and consumers. However, it presents major risks to public health and safety.
Advanced track and trace capabilities, supply chain visibility, and testing help combat food fraud. But prevention requires food companies to make ethical practices a priority across their operations and culture.
To find out more about how Signum Solutions and SAP Business One can help you achieve end-to-end trace ability to maintain the safety and integrity of your products, speak to one of our industry experts on 01244 676 900