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Organic Food Fraud in 2020

Twelve million dollars buys a lot of raspberries. Even if they are organic. In August 2019, a $12m shipment of (supposedly) organic raspberries was intercepted at the Chilean border, as they were being exported to Canada. They were accompanied by fake organic declarations and fraudulent paperwork claiming they were grown in Chile.

It was an all too common occurrence; organic food fraud, committed by criminals to profit from the higher prices consumers will pay for organic, “clean” produce. The raspberries were not grown in Chile; they had been shipped all the way from China; imported to Chile so the fraudsters could pretend they were locally grown.

And they were not organic.

Organic berries are vulnerable to food fraud

 

Sales of organic food have increased since the global corona virus pandemic started. Sales in the USA were up 50% in March 2020. An Organic Trade Association poll of “likely organic shoppers” found 90% of respondents think buying organic has become more important because of the virus, presumably because of an increased focus on health and healthy eating.

Sales of organic food are increasing year on year. In 2019, American consumers bought $55.1 billion worth of organic food, up on the previous year by 4.6% .

As organic food becomes ever-more popular, frauds like the raspberry heist are becoming more common. It is impossible for a consumer to know whether food is authentically organic or not. This makes organic fraud easy for criminals to get away with. Organic foods are one of the food types most frequently affected by food fraud, according to the Decernis Food Fraud Database.

The good news for the USA is that after many years of criticism of its organic program, the Department of Agriculture (USDA) is making a visible effort to reduce fraud in the organic supply chain.  In fact, they are proposing new rules that aim to strengthen control systems, improve traceability for organic produce, and increase enforcement of the USDA organic regulations.

Organic peas vegetable pesticide
Organic foods and food fraud are like two (freshly picked) peas in a pod.

How to protect your business from organic fraud

If you have a food business that buys or sells organic food, you are at risk, now more than ever. Global supply chains have been disrupted by the pandemic and these disruptions mean many suppliers are struggling to deliver foods that meet specifications. It is tempting for wholesalers and distributors to substitute conventionally-grown produce for organic to make extra profits, or simply to allow them to fulfill customers’ orders.

Step 1: Become aware

Don’t be blind to the risks. Organic fraud happens more often than most people realise. Would you be able to tell the difference between an organic raspberry and a conventionally grown raspberry? Probably not. If criminals in Chile found it profitable to transport fake organic raspberries right across the globe before the pandemic, you can bet they are even more motivated to perpetrate fraud in the current economic climate.

Step 2: Educate yourself

If you own a food business, educate yourself about the risks. Learn about organic fraud; how it is perpetrated, what it looks like.

Michigan State University and the USA Organic Trade Association have published a free online course in Organic Fraud Prevention. It is US-centric but contains fraud detection and prevention strategies that can be applied anywhere.

Step 3: Assess your ingredients and products

Make a list of the organic food ingredients or food products that your business purchases. For each item on the list, ask yourself the question: “Can I be sure this is really organic?”.

Right now, you probably rely on verbal assurances from suppliers or pretty logos on packaging or invoices. That’s a fool’s game.

Instead, seek proper documentation from suppliers: request copies of organic certificates and cross-check them against invoices and labels. Or take a minute to research the certifications and logos on labels. All reputable organic certification bodies maintain a list of certified products or suppliers that you can check online. If the product or grower has a genuine organic certification, you will find it listed on the certification body’s website.

Unfortunately, it’s not uncommon for food companies to use organic logos without having the proper certifications.  Always check.

You can also check the list of fraudulent certificates on the USDA organic program website.

If your business operates a food safety program it should already have a food fraud vulnerability assessment.  Review that assessment.  All organic foods should be rated as “vulnerable” in the vulnerability assessment and they must have appropriate mitigation strategies applied to reduce the risks.

Step 4; Take steps to reduce the risk

If you can’t be sure of the authenticity of the ingredients or products you are buying (and selling) you only have two choices:

(i) change your supplier to one with a properly certified organic program, or

(ii) stop making organic claims about the products you sell.

To do anything else puts you at risk of inadvertently committing food fraud, which is a criminal offence.

Consumers are buying more organic foods than ever before.  At the same time, the unstable global economy makes fraud more tempting and supply chain disruptions provide extra opportunities for criminals.  Organic food fraud puts your business and brands at risk.

Now is not the time for complacency; stay alert and keep your brands safe.

 

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Oregano Fraud; six things every food professional needs to know

1. What happened?

Testing was conducted by the Australian consumer group Choice, mirroring tests conducted in the UK and published by the UK Consumer Group Which? in 2015.  A selection of packs of dried oregano were purchased from supermarkets (grocery stores), delis (specialty food stores) and grocers (produce stores) in three cities in Australia and a single sample of each was tested.  Seven of the twelve samples, over fifty percent, were found to be inauthentic, with the inauthentic samples containing between 10% and 90% of ingredients other than oregano, including olive leaves and sumac leaves.

2. Why test oregano?  

Herbs and spices are one of the rock-stars of food fraud; their complex cross-border supply chains, high price per kilogram and the fact that they are often sold in powder or particulate forms make them prime targets for adulteration, dilution and substitution with cheaper materials.  

oregano adulteration
Source: Elliott, C. (2016) Addressing complex and critical food integrity issues using the latest analytical technologies

 

Why oregano in particular?  Professor Elliott, Director of the Institute for Global Food Security, and an international authority on food fraud conducted testing on oregano in the UK in 2015, the results of which were published by the UK Consumer group Which?.  It is possible that Prof Elliott used rapid evaporative ionization mass spectrometry (REIMS), a test method recently made available by Waters Corporation, although Which did not disclose the test method. REIMS makes use of a rapid sampling method that produces vapour which is analysed using time of flight mass spectrometry.  Sophisticated software compares molecular markers in the resulting spectrum with those in known materials in a database, allowing a sample to be quickly identified as belonging to a particular product type or not.  The method has huge potential for testing food authenticity, with one of the advantages being that unlike other tests for adulteration there is no need to specify which adulterants to seek.  A downside is that many hundreds or thousands of tests must be performed and compared to traditional analytical methods to create a database before the method can be used with confidence to determine the authenticity of any given material.

Professor Elliott recently revealed that Waters Corporation and Queens University, Belfast worked together to build a database of oregano samples (Elliott, C. (2016) Addressing complex and critical food integrity issues using the latest analytical technologies).  This means that oregano is one of the few materials that can currently benefit from accurate authenticity testing using the REIMS method. 

3.  Are the results unexpected?

Global food fraud commentators attribute the presence of significant concentrations of adulterants or diluents in dried herbs to economically motivated food fraud in most cases, as opposed to seafood mislabelling which sometimes occurs due to unintentional errors in species identification.  Food fraud is estimated to cost the United Kingdom one billion pounds each year.  It is thought to be very common among some food types, including herbs and spices.

4. Who is responsible?

It is highly unlikely that any of the brand owners named in the Choice report were aware that they were selling adulterated herbs.  Most if not all of the brands included the Australian testing would have been sourced and packed under well-controlled systems that include vendor approval processes, formal specifications for incoming materials (such as bulk herbs) as well as certificates of analysis and declarations of conformity to specification.   The fraudulent tampering probably occurred further up the supply chain during drying, bulk packing, shipping or storage.  Interestingly, all seven adulterated samples contained olive leaves and two contained sumac leaves.  It is possible that tampering occurred in two different points within the supply chain for some products; perhaps one fraudster added olive leaves to bulk lots of the herb at a location close to the oregano growing area and sumac leaves were added by someone else at a later date.

5. What are the legal and financial ramifications?

The sale of misrepresented products is a breach of Australian consumer law and ignorance cannot be used as a defense.  The incidences were investigated by the Australian Competition and Consumer Commission (ACCC), an independent authority of the Australian government.  One company was fined a substantial sum for selling product that contained only 50% oregano leaves.  It is likely that other businesses that had been supplied with inauthentic herbs sought financial redress from their suppliers, either through purchasing contract penalties or through private legal action.

When a food business chooses to voluntarily recall or withdraw their products from the marketplace they may try to claim the costs against their business insurance. Insurance companies will seek to recover their costs from further up the food supply chain and this may have an impact on premiums in coming years.

6. What should food businesses do?

No food business is immune from economically motivated food fraud and preventing food fraud from affecting a business is a multi-functional task that should involve personnel from purchasing, finance and legal departments as well as food safety and quality personnel.  In the short term however, there are some things that can be done by food safety and quality personnel to help prevent, deter and detect food fraud without a lot of investment from other parts of a food business: 

  1. Update your purchasing specifications to include authenticity requirements.
  2. Review your vendor approvals systems and revise questionnaires and requirements if required.  Consider implementing more stringent requirements for those suppliers that provide vulnerable materials.
  3. Request certificates of analysis (CofA) from suppliers of vulnerable materials
  4. Begin a testing regime for vulnerable materials
  5. Investigate the costs and benefits of supply chain audits, including whether ad-hoc, one-off visits to certain suppliers might be worthwhile
  6. Request tamper-evident packaging and bulk container tamper seals for vulnerable raw materials
  7. Ask suppliers of vulnerable materials to undertake a mass balance exercise at their facility or further upstream in the supply chain.
  8. Make a business case for switching suppliers of materials that prove to be consistently problematic and present it to your purchasing department.

Want to learn more about food fraud mitigation in the spice industry?  This article in Food Safety Magazine provides an excellent insight. 

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How food fraud is uncovered; two cases of origin fraud

Origin fraud occurs when a food is misrepresented with respect to its geographical origin; it’s a type of fraud that can be categorised as ‘mislabeling’.

Examples of mislabeling include:

  • describing a fruit or vegetable as ‘organic’ when it was conventionally grown
  • cheeses and meats labeled as kosher or halal that are not
  • Spanish olive oil falsely declared as being ‘Italian’.  This is origin fraud.

Mislabeling is also called misbranding in some countries.  Because it is intended to deceive customers and consumers it is illegal under consumer protection laws and trade/contract laws just about everywhere.  Because almost every type of food fraud involves mislabeling to some extent, quoting statistics on mislabeling is difficult.  As an example, a botanical supplement labelled as 100% turmeric extract but that actually contains 15% filler is both mislabeled and diluted.  To make it even trickier, different organisations using different words to describe similar food fraud activities.  Learn more about classifying food fraud types in this great Food Safety Tech Article.  Suffice to say, mislabeling fraud is very common and, according to US Grocery Manufacturers Association, it affects around 10% of food products globally.

Coffee growers in Hawaii have launched a class action to protect their products

How do we expose origin fraud?  Typically, origin fraud is uncovered after authorities have been tipped off about suspect activity in a supply chain, either by people from within the supply chain or by competitors of the mislabeled product.   The evidence used to pursue the fraudsters often comes from either fraudulent documentation, or from testing of finished products.  This year we have seen an increase in the use of authenticity testing by representatives of ‘authentic’ brands to expose fraudulent products.  This is a trend that I expect to continue as test methods are improved, refined and can more easily be extended to assess specific product attributes.

I have been following this trend with interest and was reading, today, about alleged origin fraud in coffee in the United States. This is a case that is representative of the trend to use sophisticated test methods to authenticate finished product attributes.  Another recent example would be honey testing in Australia.  In the coffee case, growers from the Kona district of Hawaii have filed a lawsuit against retailers for allegedly selling ‘Kona’ coffee that does not contain a reasonable amount of coffee from the district. Kona coffee production is 2.7 million pounds, however more than 20 million pounds of coffee labelled ‘Kona’ is sold each year.  The plaintiffs claim to have analytical test results to support their claims.  Nineteen brands of coffee, sold by retailers including Walmart, Cosco and Amazon, have been named in the complaint.  Chemical testing technology underpins this current lawsuit, as it allows the coffee growers to show, for the first time, the actual Kona content of the coffee that is being allegedly mislabeled.  For this to be possible, the coffee growers would have had to organise for testing laboratories to create a database of chemical test results of authentic samples of Kona coffee.  Databases like this are used to model a product’s unique chemical fingerprint using sophisticated mathematical computations.  The test method can then be used to compare the ‘fingerprints’ of suspect brands against those of authentic products, such as Kona-grown coffee, and infer the amount of genuine material in each sample.  Developing databases for this type of testing is expensive and time consuming.  However, there are an increasing number of laboratories that have the machinery, skills and software to perform this work, so it is becoming more accessible to brand owners.

Specialty vinegars fetch high prices and can be vulnerable to economically motivated food fraud.

In cases that do not originate with product testing, it is activities in the supply chain that provide clues to origin fraud.  This month there have been reports of origin fraud for a specialty vinegar, Modena balsamic vinegar.  Modena balsamic is protected by a special geographical designation under European regulations.  According to these rules, Modena balsamic vinegar must be produced using grapes only from certain regions in order to be considered authentically ‘Modena’.  A massive fraud involving 15 million Euros worth of materials has been uncovered in Italy after a special operation by local authorities found that the wrong grapes were being used to produce this very expensive product.  Although operational details about this investigation are scarce, these types of actions by authorities are often initiated after authorities have received a tip off from someone connected with the supply chain.   Another example of such a tip-off includes this recent wine counterfeiting operation in which authorities became aware that a printing shop had received an order for 4,500 wine labels from a company that was not the brand owner.

More tip-offs and more testing are my predictions for 2019 and 2020.  These are going to lead to more investigations, complaints and enforcement actions against perpetrators of food fraud.  And that’s a win for everyone!

Want our help with a food fraud problem?

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Letter from Thailand – food fraud, food safety, food excellence

The World of Food Safety Conference was held in Bangkok in conjunction with THAIFEX in early June 2017.  Delegates represented large and medium sized food businesses in South East Asia as well as government and trade organisations.  Thai, Singaporean, Malaysian and Myanmar delegates dominated the group.  The attendees were hungry for knowledge about food fraud and food fraud prevention; almost 50% of the topics across the two-day conference were related to food fraud, traceability, supply chain management and crisis management.

As well as speaking about recent trends and developments in food fraud, I enjoyed learning from the other speakers, sampling the wonders of THAIFEX and enjoying Thai food which was truly excellent.

Karen Constable spoke about Food Fraud at World of Food Safety Conference

 

Background checks as an aid to fraud mitigation

I was lucky to gain some fantastic insights into the intricacies and challenges of performing background checks on business people in Asia from Jingyi Li Blank,  Mintz Group.  Background checks on business owners are a great way to understand vulnerabilities to food fraud when seeking new suppliers or investigating sources of new raw materials.  South East Asia and China present some challenges for companies performing background checks, including the way that people in the area often have multiple spellings and versions of their names, as well as issues related to cross-border jurisdictions.

Prevalence of food fraud prevention systems

Julia Leong from PricewaterhouseCoopers shared some statistics on current levels of compliance among food companies who have interracted with the PwC SSAFE tool: 41% of companies have no systems to detect or monitor fraud, 36% have no whistle-blowing systems and 38% do not perform background checks on employees. Food businesses that neglect these areas are exposing themselves to serious financial risks from food fraud.

Support for food businesses in developing countries from GFSI

It was heartening to hear about the new program being launched by the Global Food Safety Initiative (GFSI) in developing countries.  The Global Markets Program is designed to bridge the gap between food operations with no formal food safety systems and those who have GFSI-endorsed certification by helping companies to develop food safety management systems through a process of continuous improvement.  Within the program, manufacturing support systems related to hygiene and other basic principles of food safety are implemented progressively over a defined time period as the companies work to attain either a basic or intermediate level of compliance.  The results are not accredited but become the foundation for further improvements so that the business can work towards implementing a complete food safety program.

Sustainability in the food supply chain; palm oil and coconut oil

Matthew Kovac of Food Industry Asia presented on behalf of Cargill, providing a fascinating introduction to the sustainability programs Cargill has introduced in their palm oil and coconut oil supply chains.  Cargill is a major grower, purchaser and refiner of palm oil and are aiming for a 100% sustainable target by 2020.   For Cargill, sustainability in palm oil means:

  • No deforestation of high value areas
  • No development on peat (burning beat causes air pollution and contributes to climate change)
  • No exploitation of indigenous peoples
  • Inclusion of small land holders

Coconut oil sustainability is being improved in conjunction with The Rainforest Alliance, by providing training and support for Filipino growers so that they can increase their yields, as well as providing them with access to wood fired dryers that allow the growers to produce copra that has better colour, less aflatoxins, less environmental contaminants and lower free fatty acids than traditionally sun-dried copra.

The many and varied hazards in HACCP for fish

It was both fascinating and scary to be reminded of the hazards to food safety from fresh fin fish by Preeya Ponbamrung, from Handy International: pathogenic bacteria, viruses, biotoxins such as ciguatera, biogenic amines (histamine being the most common), parasites and chemicals such as water pollutants and antibiotics used in aquaculture.  That’s quite a hazard list; it was heartening to hear Ms Ponbamrung describe the control methods employed by the fish processing industry to keep those hazards out of our food supply.

Crisis communications; winners and losers

We learnt about successful methods – and not-so-successful-methods – that food companies use to communicate food safety and food fraud risks to consumers.  Nestle was applauded for its fast, clear and practical response to reports of counterfeit versions of its popular MILO chocolate drink powder in Malaysia.  The brand owner promptly published instructions for consumers on social media and in the local press explaining how to tell the difference between the fake and the real product.

Image: MILO Malaysia Facebook, March 2015

 

Some other companies do not do so well with crisis communications.  Cesare Varallo of Inscatech, showed us that the public communications of Chipotle in the USA about its food safety problems were less than ideal.  The brand has suffered serious losses and it has been reported that 13% of its former customers say they will never return.  Time is of the essence in a food safety or food fraud crisis.  Does your company have a crisis plan?

Want to know more about any of these topics?  Get in touch with us, we love to help.

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Food Fraud; news of emerging issues

The macadamia nut tree out the back of my place is flowering and is covered with long, yellow flower spikes.  In a few months it will be covered in nuts.  However, in world markets right now there is a shortage of whole macadamia nut kernels.  While stocks remain scarce, macadamia products are at increased risk of fraudulent activity.  Whole kernels are less likely than other macadamia products to be affected by fraudulent adulteration, however they are still at risk of fraudulent misrepresentation of country of origin, packing date and organic status.  Nut pieces, meals and flours are at risk of fraudulent adulteration with cheaper fillers and substitutes.

Here are some other interesting issues in food fraud or potential food fraud from the last month:

Are breadfruit products an emerging fraud risk?  Breadfruit is a starchy tropical fruit that grows on large trees in the Pacific Islands and the Caribbean. Breadfruit flour is said to have huge potential as a gluten-free product and breadfruit could become the next ‘superfood’, but right now demand outstrips supply and new trees take 3 to 5 years to bear fruit.  If the marketing gurus succeed in making breadfruit the next big thing, it will attract a premium price in North America and Europe and gluten-free breadfruit flour could become an attractive target for fraud.  I will be watching this product closely to see how the situation develops.

breadfruit
Is breadfruit destined to be the next ‘superfood’?

Hairy crabs, a delicacy in parts of China, are in season now, with crabs from particular lakes being very highly prized and even more expensive than their counterparts from other lakes.  A crab-marketing group representing hunters from Yangcheng lake designed an anti-counterfeiting system based on bar-code technology for Yangcheng crabs.  Unfortunately, they discovered that sellers of crabs from other lakes were forging the anti-fraud bar-codes.   I predict this type of fraud to increase over the next few years as consumers come to expect and trust anti-counterfeit measures applied to expensive consumer items.

For more on these topics plus expert analysis of the food fraud risk profiles of hundreds of other food materials check out our food fraud risk information database.