News & Events

Food Fraud Costs Billions Each Year

Nov 4, 2021 10:00:00 AM / by FreshByte Software

A decade ago, the U.S. Grocery Manufacturers Association estimated that food fraud cost the global food industry between $10 and $15 billion per year and the problem has only accelerated since then.

“Fraud drains an estimated $30 to $40 billion every year from the global food industry. The Consumer Brands Association claims that roughly 10 percent of commercially produced food and beverage products are affected by fraud,” wrote TraceGains content marketing specialist Denis Storey in 2020. “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.”

The problem has been compounded by the COVID-19 pandemic and consumer shift towards ecommerce with demand for fresh and frozen food expected to climb from nearly $35 billion to more than $250 billion by 2025.

Food fraud has become so pressing of an issue that the U.S. Food and Drug Administration (FDA) created a web page with resources dedicated to “economically motivated adulteration (EMA) or food fraud this month.

“Food fraud has become such an important issue that many governments are monitoring it much more closely. To keep producers and consumers informed on the latest developments, the FDA has generated a new web page on economically motivated adulteration (EMA),” says FoodSafetyTech.

What is Food Fraud

The FDA defines three categories of food fraud:

  • Substitution: Intentional adulteration of food with cheaper ingredients for economic gain. Bad actors may mix low-quality materials into their products to increase profit margins.
  • Tampering: Introduction into commerce of food containing prohibited substances. Example could be Chemicals or dangerous toxins added to a product.
  • Counterfeiting: Misbranding or mislabeling of food and ingredients or species substitution

“Food fraud has a disastrous impact on consumers and the food suppliers and processors involved. It can pose a health risk if unidentified allergens or hazardous materials are added to food products,” wrote Consumer Goods Forum in March.

Examples of Food Fraud

The FDA says that estimating how frequently food fraud occurs or its exact economic impact can be hard because food fraud is designed to avoid detection.

Examples of food fraud cited by the FDA include:

  • Honey and Maple Syrup: Even though their labels represented their food as a pure product, some unscrupulous companies have previously mixed honey or maple syrup with cheaper sweeteners such as corn syrup, rice syrup, sugar beet syrups, or cane sugar. This lowered the cost of production, but consumers still paid the full price of a pure honey or maple syrup product with the additional profit going to the companies.
  • Olive Oil: Like honey and maple syrup, some companies have previously diluted more expensive extra-virgin olive oil with less expensive vegetable oil but sold the mix as pure olive oil at a higher price.
  • Seafood: Seafood fraud often happens when someone substitutes a less expensive species of fish for a more expensive species, such as selling less expensive snappers (Lutjanus spp.) or rockfish (Sebastes spp.) for more expensive red snapper (Lutjanus campechanus) in a food. See our Seafood Species Substitution and Economic Fraud page for more information. Another example is when a seller adds ice to frozen seafood to make it heavier before selling it by weight.
  • Juice: When manufacturers sell a mixture of citric acid, sweetener, and water as “100%” lemon juice or mix grape juice into their “100%” pomegranate juice, the consumer harm is mostly economic. However, when a company mixes expired, contaminated juice stored in dirty conditions with fresh juice in order to hide the low quality of the expired filthy juice, the resulting juice can possibly harm the person drinking it.
  • Spices: One type of spice fraud occurs when an expensive spice (such as saffron) is bulked up with other non-spice plant material (such as plant stems). Another type of fraud is using dyes to give spices a certain color, especially when the color strongly impacts the perception of quality. Lead-based dyes and other industrial dyes that can cause adverse health problems such as cancer have been found in spices such as chili powder, turmeric, and cumin.

Monitoring for Food Fraud

The FDA says detecting food fraud requires constant adaptation because people change the ways they commit fraud in response to past regulatory actions and available detection techniques.

Here are some of the ways the FDA monitors the food market for food fraud:

  • Detecting Food Fraud: To spot trends and instances of food fraud, the FDA gathers information from sources such as consumer or industry complaints, news articles, science publications and presentations, databases, other governments, academia, and subject matter experts. Food fraud is detected through inspections with the FDA regularly creating and testing new food fraud detection tools. Routine and targeted sampling is also used.
  • Confirming Food Fraud Through Testing: To check whether food fraud has occurred, the FDA has a variety of methods for identifying what makes a food unique. Food analytical chemistry, which looks at everything from the basic chemical composition of foods to the chemical identity of added components, plays a significant role. Methods used in biology, such as DNA sequencing, can also play a role. Building a DNA library that has the DNA barcode for fish species or a similar one for plants has greatly helped with identifying when species substitution is happening.
  • Collaborating with Other Regulatory Partners: To help identify new instances of food fraud and new ways to combat it, the FDA often exchanges information on EMA with other federal agencies such as the National Oceanic and Atmospheric Administration and the Department of Justice.

Companies can help fight food fraud by using a range of methods to detect fraud using advanced tactics, according to Pwc, such as:

  • Advance supply chain management and logistics simulations
  • Rigorous supply chain risk and resilience processes
  • Use of third-party data sources
  • Leading scientific capabilities
  • Enhance recall processes

Find out how Fresh Byte Software can help your company fight food fraud.

Tags: Traceability, Fraud

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