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Food fraud: motivations and influencers.
20/03/22 |
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Food fraud is generally regarded as economically motivated, But there can be a wide range of motivators and influences that would encourage fraudulent activities by food manufacturers. this article explores a sampling of the various motivators that might influence wrongdoers to commit food fraud.
Financial gain from substitution or dilution of high-cost materials
financial gain is perhaps the most obvious motivator for food fraud. this is where a comparatively low-cost material is used partly or wholly in place of a more expensive material. For example, herbs and spices may be diluted with other plant matter to make up volume because as a category of material, herbs and spices command a relatively high financial value. The EU food fraud network AAC-FF Activity Report 2020 shows that replacement dilution addition or removal in product represents 21% of the noncompliance categories for the year 2020.
There are massive financial incentives for food crime. the Food Standards Agency published ‘The Cost of Food Crime’ on the 3rd of June 2020 - and while the figures generalise beyond substitution and dilution to include the holistic costs associated with food crime, it's noteworthy that the FSA has used figures which estimate the cost food fraud to the industry be around US$10-15bn in the USA, £11.6bn in the UK or US$40bn globally. The economic incentives for food fraud are so great, in fact, the the US Food and Drug administration expresses its concern with the subject in terms of economically motivated alteration - with ‘food fraud’ displayed in parentheses. It's little wonder, then, that food fraud has become almost synonymous with economically motivated food crime.
There are massive financial incentives for food crime. the Food Standards Agency published ‘The Cost of Food Crime’ on the 3rd of June 2020 - and while the figures generalise beyond substitution and dilution to include the holistic costs associated with food crime, it's noteworthy that the FSA has used figures which estimate the cost food fraud to the industry be around US$10-15bn in the USA, £11.6bn in the UK or US$40bn globally. The economic incentives for food fraud are so great, in fact, the the US Food and Drug administration expresses its concern with the subject in terms of economically motivated alteration - with ‘food fraud’ displayed in parentheses. It's little wonder, then, that food fraud has become almost synonymous with economically motivated food crime.
Avoidance of pre-printed packaging waste
There are many Instances where pre-printed packaging displays compositional information about foodstuffs - particularly at retail sale. Pre-printed packaging is expensive and generally has long lead times - not only due to artwork generation but also because of constraints by the packaging manufacturers.
Where changes to recipes, supply chain for ingredients, and manufacturing processes result in compositional changes for the food in relation to the pre-printed packaging, manufacturers are presented with a dilemma: waste any stock they hold of pre-printed packaging and incur the associated costs and delays of replacement…. or pack food into pre-printed packaging that misrepresents the composition or nature of the food.
Part of the motivation here is financial, and part is logistical. That acknowledged, where food manufacturers choose to make use of their existing stock of pre-printed packaging, there is a practical distinction between the motivation to do so and a premeditated financially motivated crime. From the point of view of the consumer, the outcome is largely the same in that the pack copy misrepresents the contents.
Where changes to recipes, supply chain for ingredients, and manufacturing processes result in compositional changes for the food in relation to the pre-printed packaging, manufacturers are presented with a dilemma: waste any stock they hold of pre-printed packaging and incur the associated costs and delays of replacement…. or pack food into pre-printed packaging that misrepresents the composition or nature of the food.
Part of the motivation here is financial, and part is logistical. That acknowledged, where food manufacturers choose to make use of their existing stock of pre-printed packaging, there is a practical distinction between the motivation to do so and a premeditated financially motivated crime. From the point of view of the consumer, the outcome is largely the same in that the pack copy misrepresents the contents.
Unauthorised substitutions
Suppose a recipe calls for free range egg, and the manufacturing facility does not have stock of free range egg but there is available stock of caged egg. The production manager is now faced with a decision: discontinue production and incur any consequences associated with downtime and shorting a customer order… or use the available stock of cage egg and manufacture product with all of the physical and organoleptic properties of compliant product but with a fraudulent ethical or sustainability claim.
Here, the production manager as an individual has nothing financial to gain through a fraudulent action - so this isn't economically motivated alteration. Even so, part of the pressure felt by the production manager is rooted in the financial performance of the company on the back of fulfilment of orders and efficient production performance.
This is interesting because it is the individual performance of the production manager in the eyes of more senior management that underpins a motivation for a fraudulent act, but it may very well be the case their making that substitution would be entirely contrary to the wishes of the senior management. The reputational risk that making this kind of substitution exposes the company to may be completely unacceptable to senior management, but it is the perception held by the production manager that ultimately shapes the decision-making. In other words, if the production manager incorrectly assumes the managing director or CEO would endorse the decision to substitute caged egg for free range, then the motivation for fraud is performance based rather than financial.
Of course, this type of scenario could be applied in any number of cases - so for example one could have standard cocoa powder used in place of Fairtrade cocoa powder and the same system of motivators would apply. This is an expression of culture at different managerial tiers as opposed to clear financial incentive.
Here, the production manager as an individual has nothing financial to gain through a fraudulent action - so this isn't economically motivated alteration. Even so, part of the pressure felt by the production manager is rooted in the financial performance of the company on the back of fulfilment of orders and efficient production performance.
This is interesting because it is the individual performance of the production manager in the eyes of more senior management that underpins a motivation for a fraudulent act, but it may very well be the case their making that substitution would be entirely contrary to the wishes of the senior management. The reputational risk that making this kind of substitution exposes the company to may be completely unacceptable to senior management, but it is the perception held by the production manager that ultimately shapes the decision-making. In other words, if the production manager incorrectly assumes the managing director or CEO would endorse the decision to substitute caged egg for free range, then the motivation for fraud is performance based rather than financial.
Of course, this type of scenario could be applied in any number of cases - so for example one could have standard cocoa powder used in place of Fairtrade cocoa powder and the same system of motivators would apply. This is an expression of culture at different managerial tiers as opposed to clear financial incentive.
Misrepresentation through technical incompetence
Suppose a confectionery product has many of the organoleptic properties of chocolate, but fails to meet the compositional standard of the chocolate regulations. It would only take a competency shortcoming on the part of the marketing manager or food technologist responsible for pack copy approval to result in a fraudulent marketing claim. In fact, it would be very easy to refer to a food material with the designation ‘milk chocolate’ as a kind of colloquial reference despite technical nonconformity with the regulations. This is a very commonly-occurring scenario, with ingredients placed on the market by suppliers using designations such as ‘compound’ and subsequently misrepresented on consumer facing packaging as chocolate due to a misunderstanding of the regulations by individuals involved in artwork approval.
This kind of occasion could not be attributable to financially motivated food crime, but the outcome for the consumer is practically indistinguishable from economically motivated food fraud.
This kind of occasion could not be attributable to financially motivated food crime, but the outcome for the consumer is practically indistinguishable from economically motivated food fraud.
In summary
It's easy to think of substitution, alteration, and fraud as being reduceable to a category of food crime instigated by financial motivations, but the reality is more nuanced. There can be many non-obvious incentives for food fraud that stray from economic motivations. There are certainly economic motivators for food fraud that play a significant role in fraudulent activities across the supply chain. There are also individual motivations independent of financial gain that arise across a range of circumstances.
A better-developed understanding of the motivations and reasons for food fraud will better equip the industry in its preventative efforts.
A better-developed understanding of the motivations and reasons for food fraud will better equip the industry in its preventative efforts.
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Author: Duncan Lacey - Director of Innovation, Food Portal
Duncan Lacey | LinkedIn |
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