Companies battle against fake food

16 August 2017

Multinational companies are turning to specialist investigators to find evidence of food fraud and malpractice in their supply chains.

Over the past decade scandals related to fake food have made headlines.

In April this year, a joint Europol-Interpol operation involving 60 countries targeting counterfeit and substandard food and drink, resulted in the seizure of 9,800 tonnes of food and more than 26.4m litres of beverages, totalling 13m items, which were potentially harmful. This included alcohol, seasoning cubes, seafood, olive oil and luxury goods such as caviar.

In China, during the first three quarters of 2016 alone, Chinese Food and Drug Administration officials said they had uncovered more than 500,000 incidents of illegal behaviour, including plastic pellets passed off as rice and carcinogenic recycled cooking oil.

Speaking to ABC radio, Michell Weinberg, founder of US-based global food supply chain investigators Inscatech, said after increased reports about counterfeits, food producers had responded by hiring his company to scour through their supply chains.

Working mainly with US companies who export products from China, Weinberg said his company was using genetic tests and molecular markers to verify a product’s authenticity, as well as informants on the ground to investigate and provide data.

He said his agents were uncovering fraud about 70% of the time when companies hired them to investigate but incidents of fraud in China were much higher. 

“It’s pervasive, it’s across food groups and it’s anything you can possibly imagine," he said.

Earlier this year, authorities found around 50 underground factories in northern China that were creating counterfeit versions of products such as spice mix and soy sauce carrying popular brand names but containing industrial salt unfit for human consumption.

China exported $25.8bn worth of food products in 2016, according to World Bank

Shaun Rein, managing director of consultancy firm China Market Research Group, said as supply chains become more global, services that helped companies mitigate reputational risk that food-fraud posed would be a “big growth area”.

“It’s a great business opportunity,” he said.

“It’s going to be important not just a China play but as a global play because Chinese food companies are becoming part of the whole global supply chain.”

Food fraud costs the global food industry around $40bn each year, according to a 2016 report by Pew Research Centre.

China has responded to the growth in scandals by strengthening food safety laws in 2015. Those found tampering or producing counterfeit food face tougher penalties.

The country has also spent more than $800m hiring additional food safety personnel and bolstering monitoring facilities, according to the government.

Meanwhile, many companies, including Walmart, are using blockchain to track products through supply chains. The company used the technology system on pork in China and mangoes in the US, cutting their tracking time from 26hrs to just seconds.

However, Weinberg said he remained doubtful of blockchain’s ability to combat food fraud and more traditional methods such as undercover agents were needed to root out the problem.

“In most food supply chains, there is one or more unreliable data providers,” he said.

“This means blockchain is likely useless for protecting against food fraud unless every piece of data is scrutinised to be accurate.” 

Yongning Wu, chief scientist at the government-run China National Centre for Food Safety Risk Assessment told Bloomberg that he also remained doubtful that blockchain could eradicate the fake food problem. 

“Fake food producers will always update their technology to dodge inspections,” he said.

“There are promising signs that more is being done to crack down on the supply of fake food but due to the sheer size of countries like China, it is harder to regulate large networks of criminals who are willing to commit fraud in order to make money.”

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