Criminals have seen a chance to profit from the boom in sustainable food and businesses need to take the problem seriously, writes Nick Hughes.
It’s an unfortunate paradox of the market economy that as a desirable market prospers a less desirable one is sure to emerge in its shadow.
Such is the case with ethical foods, where a burgeoning market for sustainable products has presented an opportunity for rogues to profit by selling fraudulent imitations.
The research company Ecovia Intelligence cites a number of incidents of mislabelled organic foods that have recently come to light, including a major shipment of corn and soya beans into the US from Ukraine via Turkey, whose value was increased by about $4m (£3m) after being falsely labelled as organic.
So why is the risk of fraud in sustainable products so high and why should businesses take the matter seriously?
As ever, where criminal activity is involved, the motivation comes down to money. In his interim Elliott Review report in 2013, Prof Chris Elliott noted that premium claims on product labelling such as country of origin, water and fat content, animal welfare, organic status, feed purity and breed could indicate a strong risk of fraud in a particular commodity, and that products such as manuka honey that command a significant price premium may be replaced by lower-grade products.
Ecovia sees Asia as the region most at risk from food fraud, noting that rising consumer spending power and growing demand for sustainable and premium foods have made Asia the fastest-growing market for such products.
It describes China, in particular, as “the epicentre of food fraud”. In the last decade, food scandals have involved mislabelled organic pork, rotten meat and sewage oil, while in 2008, the adulteration of dairy products and milk powder with the industrial chemical melamine led to the death of six babies and made another 300,000 ill.
Ecovia suggests that some Asian operators are making false organic claims on food products because of a lack of regulations and enforcement. Meanwhile India, with more than half a million organic farms, has no laws preventing fraudulent claims.
But food fraud is not just restricted to Asia; the Brazilian beef and European horsemeat scandals highlighted the vulnerabilities in complex, dynamic supply chains, with the result that consumer confidence in the integrity of food has been damaged.
A recent NFU Mutual report found that 72% of people believe there is an issue with food fraud in the UK. One-third also said that they are less trusting of products and retailers than they were five years ago, compared with only 9% whose trust has increased.
The study also found that takeaways are the least trusted type of food outlet (42%) followed by online (21%) and convenience stores (16%).
Certification marks should, in theory, help assuage some of these concerns. The NFU Mutual survey found that food assurance stamps have been found to have a very strong influence on purchasing decisions, with 67% of people using them to help choose the products they buy.
Yet such schemes are not infallible. In 2013, Tesco was criticised for selling fresh pork labelled with the Red Tractor logo to denote its British origin when tests showed it actually originated from the Netherlands.
The risk is that the market for ethical products is undermined when consumers do not have faith in the claims being made. When NFU Mutual asked consumers which claims they least trusted, “light” or “diet” came top with 23% but organic and free-range scored highly with 12% and 11% respectively.
Certification bodies are responding to consumer scepticism by making determined efforts to demonstrate the rigour behind their assurance systems. The Soil Association has partnered with the tech start-up Provenance to create an app which allows shoppers to scan products bearing the Soil Association logo in order to access detailed information about the product’s journey along the supply chain with links to further verification detail.
Ecovia notes that other 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, while forensic techniques such as DNA fingerprinting are making their way to food labs to check product samples.
This level of assurance does not come cheap, however, and will be beyond the budget of many small and medium-sized food businesses.
Demand for more sustainable food is to be welcomed – Euromonitor International identifies “ethical living” as one of its eight global mega-trends for 2017, while the Soil Association’s Organic Market Report 2017 revealed 7.1% growth in sales of organic food and drink products. But there’s a dark side to the industry that needs to be kept in check if the market is to continue to thrive.