Fighting food fraud

 

Food fraud is simply defined as intentional deception using food for economic gain. 

Consumers are willing to pay a premium price for products such products such as Manuka honey, extra virgin olive oil, a grand cru wine or organic milk. Criminals can profit by secretly diluting these with lower value products or substandard ingredients. Such fraud is extremely difficult to detect, and international supply chains make it nearly impossible for consumers to confirm the authenticity of their purchases.

Food safety and quality management systems are focused on preventing unintentional contamination with known substances and pathogens. Food fraud, however, requires a different approach: The fraudulent ingredients and/or modifications are specifically engineered to evade quality assurance and quality control systems. 

Food fraud usually occurs where the potential for and the temptation of fraud are high, and the risk of getting caught is low. Consumers are happy to pay a premium price for products such as extra virgin olive oil, a grand cru wine or honey from New Zealand’s mānuka plants. Criminals can profit by secretly diluting these with lower value or substandard ingredients. Such fraud is difficult to detect, and complex supply chains can make it very difficult for food businesses, let alone consumers, to confirm the authenticity of their purchases. 

Recognising this, BRC (British Retail Consortium) has introduced requirements for companies to conduct a food fraud vulnerability assessment and to prepare a food fraud mitigation plan. The Global Food Safety Initiative (GFSI) will soon introduce these requirements for 15 other certification schemes. 

A science-based framework for understanding food fraud risk

In criminology, economically motivated crimes result from the combination of opportunities, motivations and inadequate control measures. In other words, food fraud generally occurs where the potential for and the temptation of fraud are high, and the risk of getting caught and sanctions are low. 

PwC, in cooperation with SSAFE, Wageningen University and the Vrije Universiteit of Amsterdam has launched a food fraud vulnerability assessment tool that helps companies analyse these three aspects in order to better understand the food fraud vulnerability for any food product or ingredient. 

 

Opportunity: The opportunity to commit fraud reflects the ease of adulteration and difficulty of detection. For a food ingredients, these are determined by composition, physical qualities, complexity of production processes, control of supply chains, as well a geographic origins. 

Motivation: High value food items for which subtle characteristics create large price differences can be enticing targets for fraudsters. Intense price competition creates incentives to replace high value ingredients with cheap substitutes. A company with a valuable brand is usually less motivated to commit fraud, while the motivation to commit economic crimes is often higher when a company or an individual is facing a financially desperate situation.

Control Measures: A food company’s primary fraud controls are its food safety management and quality control systems, as well as its managers and staff. External controls include food safety agencies, anti-fraud regulations and law enforcement. Vigilant suppliers also play a role in preventing food fraud. 

How we can help

With our expertise in risk assessment, internal controls, and supplier management, PwC can conduct a food fraud vulnerability assessment, followed by the design and implementation of a tailored food fraud risk mitigation plan. 

PwC’s assessment framework can be applied anywhere in the food supply chain, from animal feed and primary production to manufacturing and catering. It is most useful when conducted on individual ingredients, products, geographical units or facilities or production lines. The units on which the assessment is conducted can be prioritised by economic value, or by the potential for fraud-related safety risks, brand damage or financial loss. 

The assessment assesses 50 risk factors that cover the three main elements of food fraud vulnerability, i.e. opportunity, motivation and control measures. The “Opportunities” and “Motivations” sections assess risks related to your company’s internal and external environment. The “Fraud Control Measures” section looks at your company’s existing controls. 


For more information

Please refer to our publication Food Fraud Vulnerability Assessment and Mitigation

 

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Amy Cai
Priority Services Leader
Tel: +[86] (21) 2323 3698
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