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.
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.”