Uncovering Food Fraud by Optimizing Due Diligence

Uncovering Food Fraud by Optimizing Due Diligence

Food fraud is not a new issue in the food industry. This unethical practice is intricately complex, encompassing deliberate actions aimed at deceiving consumers or gaining undue economic benefits through food manipulation. This includes contaminating food materials, substituting raw ingredients, falsifying labels, manipulating production processes, certification fraud, and fraud within the food supply chain.

As an illustration, since the medieval times, the allure of spices has been prominent. However, limited reserves often lead traders to dishonestly mix them with more economical options like peanut shells, grains, stones, or even dust.

The driving factors behind food fraud are remarkably complex and diverse, ranging from economic gains through substituting raw ingredients with cheaper alternatives, seizing opportunities due to high demand and low supply, supply chain complexities, unsupervised suppliers or distributors, cultural factors, and consumer indifference towards product sources.

In today’s era, vulnerabilities and challenges are exacerbated due to the impacts of a global pandemic and widespread international conflicts.

The pandemic has introduced instability in the supply chain, escalated the demand for certain products, and created barriers to delivery. Concurrently, export restrictions and port closures during conflicts have resulted in significant disruptions.

Food fraud threats

Food fraud poses a threat to consumer safety through food contamination, economic losses, damage to the reputation of producers, and an overall erosion of trust in the food industry.

One common form of food fraud involves adulterating high-value food materials. Olive oil, for example, is often targeted due to its high price and health benefits. Unscrupulous actors typically dilute olive oil with cheaper oils like sunflower or canola and label the product as “extra virgin oil.”

Another example can be found in the cheese industry. Emmental cheese, better known as Swiss cheese, is frequently counterfeited worldwide. Emmental is exclusively produced in the Emmentaler region, in the canton of Bern, Central Switzerland. Made from raw milk sourced from cows exclusively fed on grass and straw, its stringent production rules make it an attractive market for imitators.

Combating food fraud with Know Your Vendor Services

Mitigating fraud requires close collaboration between various stakeholders such as the government, producers, consumers, and third parties, especially those supporting producers in conducting thorough audits within the supply chain, addressing its fragmentation, complexity, and lack of transparency.

The presence of vulnerabilities in the supply chain provides opportunities for fraudsters to introduce counterfeit products. Therefore, it is crucial for all involved parties to have a deep understanding of the risks and vulnerabilities within the food supply chain, as the saying goes, “Forewarned is forearmed.”

A tangible step to take is conducting comprehensive third-party audits on suppliers, intermediaries, and distributors to identify vulnerabilities and potential fraud risks. Aspects to be verified include credentials, certifications, and quality standards.

Any detail no matter how small – inconsistencies or issues – discovered during these audits must be addressed promptly. Ignoring such findings can potentially lead to significant problems for your company in the future.

It is highly recommended to engage a competent third party for these audits, such as Integrity Asia. Through Know Your Vendor service equipped with a Vendor Management System, Integrity Asia offers a comprehensive and practical vendor audit solution that can be tailored to the unique needs of your company.

Image by Freepik

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