FOOD FRAUD: THE $71 BIL­LION DOL­LAR QUES­TION

An un­se­cured sup­ply chain rep­re­sents high risk for this coun­try’s food ex­porters. Ori­tain works with lead­ing ex­porters to pro­tect their brands from food fraud in world mar­kets.

Exporter - - CONTENTS -

An un­se­cured sup­ply chain rep­re­sents high-risk for our food ex­porters. Ori­tain works with ex­porters to pro­tect their brands from food fraud.

Food fraud is es­ti­mated to cost the global food in­dus­try $US49 bil­lion a year, with New Zealand com­pa­nies bear­ing their share of the brunt.

In 2008, Fon­terra alone lost $140 mil­lion as a re­sult of the melamine poi­son­ing scan­dal in China through its 43 per­cent-owned Sanlu brand. In 2013, it caused an in­ter­na­tional scare when milk prod­ucts, in­cor­rectly thought to be con­tam­i­nated with bot­u­lism, were pulled off shelves.

The rep­u­ta­tional dam­age, both to Fon­terra and to New Zealand, is un­quan­tifi­able and China con­tin­ues to fo­cus on height­ened food se­cu­rity in its own sup­ply chain, and in prod­ucts im­ported from all over the world, in­clud­ing New Zealand.

Grant Cochrane, CEO of Duned­in­based Ori­tain, says that an un­se­cured sup­ply chain is high risk. “We've had is­sues with de­lib­er­ate tam­per­ing in this coun­try and it's the kind of ne­far­i­ous act that threat­ens the en­tire in­dus­try, as well as New Zealand's rep­u­ta­tion over­seas.

“Last year, food fraud af­fected an es­ti­mated ten per­cent of global food sup­ply and cost New Zealand com­pa­nies mil­lions. We're talk­ing about the de­lib­er­ate and in­ten­tional sub­sti­tu­tion, ad­di­tion, or tam­per­ing of food or in­gre­di­ents, coun­ter­feit­ing of food pack­ag­ing or false claims about a prod­uct for eco­nomic gain.”

Cochrane says that not all food fraud poses a pub­lic health risk, but ev­ery in­ci­dent does im­pact New Zealand's stand­ing as a ‘clean, green' and trust­wor­thy ex­port part­ner.

PwC's Sally Bern­stein (Bos­ton) says that food fraud is more dam­ag­ing to a com­pany's brand and rev­enues than un­safe food.

“While the lat­ter is close to a worstcase sce­nario for any busi­ness in the food in­dus­try, the cause can usu­ally be pin­pointed, and ad­dressed – the or­gan­i­sa­tion's rep­u­ta­tion can be sal­vaged.

“Food fraud, how­ever, means that some­one some­where is mo­ti­vated to adul­ter­ate or coun­ter­feit the food for fi­nan­cial gain. It sug­gests greed for easy money at the ex­pense of the con­sumer.”

Bern­stein goes on to say that well-known in­ter­na­tional food fraud in­ci­dents, such as horse­meat be­ing passed off as minced beef and melamine be­ing added to dairy prod­ucts, have mo­ti­vated the food in­dus­try to take a hard look at their vul­ner­a­bil­i­ties to food fraud, and do some­thing about it.

Grant Cochrane says that Ori­tain was es­tab­lished with that in mind. “We ex­ist to prove food ori­gin and pro­tect com­pany rep­u­ta­tion,” he says.

Ver­i­fi­ca­tion of ori­gin

“One of our clients, Lewis Road Cream­ery, be­came a house­hold name al­most overnight,” says Cochrane. “The de­mand for their cho­co­late milk quickly grew beyond their ca­pac­ity to sup­ply, leav­ing an op­por­tu­nity for fraud­sters to pass off sec­ond-rate (fake) ‘Lewis Road Cream­ery' prod­ucts.

“Lewis Road Cream­ery came to us to help en­sure that the rep­u­ta­tion of their brand and the in­tegrity of their prod­ucts re­mained rock solid,” he says.

Ori­tain runs a process that is unique in the South­ern Hemi­sphere (its com­peti­tors only op­er­ate out of the UK) called ‘Ver­i­fi­ca­tion of Ori­gin'. Us­ing foren­sic sci­ence, Ori­tain can prove where your prod­uct was grown or man­u­fac­tured, re­mov­ing re­liance on la­belling and pack­ag­ing, and re­duc­ing food fraud vul­ner­a­bil­ity.

Cochrane says that, us­ing sci­ence, Ori­tain can cre­ate a ‘fin­ger­print' of any prod­uct that rep­re­sents its ori­gin. This ‘fin­ger­print' char­ac­terises the unique prop­er­ties of the prod­uct that ex­ist due to its spe­cific en­vi­ron­ment.

“Once the ‘fin­ger­print' is cre­ated you can check any prod­uct in mar­ket or in the sup­ply chain against this ‘fin­ger­print' to see if it is gen­uine. So once we'd run the process for Lewis Road Cream­ery, we could quickly tell which prod­uct was the au­then­tic cho­co­late-flavoured milk and which was the fake.

“Equally if we cre­ate a ‘fin­ger­print' for New Zealand lamb, we can then test Kiwi-branded lamb (that could be from any­where in the world) to check if it is gen­uine.

“The same goes for wine.”

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