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The Real Cost of Food Fraud

Denis Storey
January 31, 2020

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Food fraud has a long history in the United States. It began in 1883 at Purdue University. Dr. Harvey Washington Jr., a chemistry professor and lead chemist at the U.S. Department of Agriculture, sought to crack down on food and beverage fraud.

Dr. Washington eventually brought the crisis to light with a series of experiments that plied a group of volunteers – with tainted food and drinks to see what would happen. Spoiler alert: They got sick.

Decades later, his research – and the publicity it generated – led to the passage of the Pure Food and Drug Act in 1906.

Back then, it was meat “preserved” with borax, and milk watered down and colored with either chalk or formaldehyde. Now, more than 100 years later, consumers still worry about bleached meat and dairy containing melamine. So much for progress.

Food Fraud is Worse Than You Think

Fraud drains an estimated $30 to $40 billion every year from the global food industry. The Consumer Brands Association claims that roughly 10% of commercially produced food and beverage products are affected by fraud.

But these figures only point to the initial economic cost of food fraud. There are the health costs to consumers poisoned by tainted food, not to mention the cost of the reputation hit on a brand when adulteration occurs.

Regulators say the foods most impacted by fraud include:

  1. Olive oil: Often substituted with a lower-cost alternative.

  2. Seafood: Less expensive fish misrepresented as higher-value fish.

  3. Milk-based products: Can consist of milk from animals (other than cows) and may be laced with powders, or just watered down and supplemented with melamine.

  4. Honey, maple syrup, and other natural sweeteners: Honey can have added sugar syrup, corn syrup, fructose, glucose, high-fructose corn syrup, and beet sugar, while maple syrup can contain added sugar or corn syrup.

  5. Fruit juices: Juices watered down, or a more expensive juice mixed with less expensive juice. Some beverages passed off as juice contain only water, dye, and sugary flavorings.

  6. Coffee and tea: Ground coffee can be cut with leaves and twigs, roasted corn, ground roasted barley, and roasted ground parchment, while tea has included leaves from other plants, additives, and colored sawdust.

  7. Spices: The world’s most expensive spice can have added glycerin, sandalwood dust, tartrazine, barium sulfate, and borax. Ground black pepper can have added starch, papaya seeds, buckwheat, flour, twigs, and millet. Vanilla extract, turmeric, star anise, paprika, and chili powder are other spices prone to fraud.

  8. Organic products: Often, fraudulently labeled when there’s nothing organic about their ingredients or production.

The above list is by no means comprehensive. Fake cheese products, for example, have morphed into a booming business over the last few years. It’s a market estimated to be growing at least 10% annually.

A far-flung, global supply chain has made it increasingly difficult for manufacturers to track the origins of raw materials. It’s also made it increasingly easy for bad actors to peddle adulterated goods.

The problem is even worse in the dietary supplements space, where labeling is a significant area of concern. The booming CBD market is almost sure to be fertile ground for fraudsters.

Fighting Back Against Fraud

The University of Minnesota’s Food Protection and Defense Institute (FPDI) is a TraceGains partner in the fight against food fraud, emerging as a front-line champion. The institute protects the global food supply through research and education and has earned a reputation for pioneering innovative solutions.

FPDI’s research, innovation, and education programs focus on reducing food system disruption. With a keen eye for fraud, the institute focuses on reducing the potential for contamination at any point along the food supply chain. It places a high priority on addressing potential threats to the food system that could lead to catastrophic damage to public health or the economy.

The group has broken down food fraud into several classifications:

  • Adulteration: Part of the finished good is fake.

  • Tampering: Legitimate product and packaging used fraudulently.

  • Over-run: Legitimate product produced exceeding production agreements.

  • Theft: Legitimate product stolen and passed off as legal.

  • Diversion: Distribution of legitimate products outside of intended markets.

  • Simulation: Illegitimate product made to look like the real thing.

  • Counterfeit: Every part of the product and packaging are fake.

The Global Food Safety Initiative is another major player in this fight. The private organization, founded in 2000, is the world’s most significant collaboration of stakeholders committed to food safety and has established a benchmarking system of food safety standards for manufacturers.

Due to FSMA, the FDA was going to kick off inspections to ensure compliance with the intentional adulteration rule in March of 2020. With those plans postponed when the FDA halted routine inspections due to COVID-19, companies must remain vigilant. 

Many food and supplements organizations lack end-to-end supply chain visibility. Without a clear view, managing risk is challenging, if not impossible. And as a result, businesses face food quality and safety issues that could permanently damage brand reputation or, worse, harm consumers.

Smart Alerts ensures businesses never miss a critical threat with automatic alerts for items, ingredients, and formulas, and daily updates on new and emerging supply chain threats. While also allowing companies to pinpoint risk research by item or ingredient, country of origin, threat type, supplier, or date of event.

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