The discovery of horsemeat in certain beef products in January 2013 caused uproar in an adulteration that cost an estimated £850m due to recalls, lost sales, and tumbling share prices (Tesco’s market value alone fell £300m)
In the spring 2013 Defra secretary Owen Paterson commissioned Professor Chris Elliott, a food science professor from Queen’s University Belfast, to carry out an independent review into the horsemeat scandal. Professor Elliott involved a host of food specialists in his review, including Mills & Reeves' Jessica Burt. The proposal was a national food crime prevention framework under eight pillars which, among other recommendations, called for an overhaul of audit regimes, information sharing and enforcement capability. It also called for a change in industry culture. In the boardrooms cost is no longer king but there is a more equal footing for technical, quality regulatory alongside commercial.
It is however important not to be complacent. Food fraud could mean unsafe food, unfit for human consumption and/or food without proper traceability and safety checks, not of the nature, substance or quality demanded, either by the consumer or your contractual terms, entering into our food products with potentially criminal liability for directors who are unable to establish they took all due diligence and reasonable precautions to avoid committing offences under food legislation.
What can food businesses do to protect their food supply, consumers and brand reputation from fraud?
There are ongoing checks, audits and risk assessments that should be being undertaken generally in relation to food products, suppliers, supply chains and contractual obligations.
In addition to these, food producers should assess the risk to their supply chains specifically in light of pressures from current market conditions and shortages.
1. Follow the money
- Identify where in the value chain of supply there is a temptation for fraudulent activity:
- Where most value can be added?
- Where is there most demand and/or scarcest supply?
- Where is a cost that can be avoided?
- What the benefits are?
- The potential for detection?
2. Where are you weakest?
- Whereabouts along the supply chain is your product most vulnerable?
- What does your company buy a lot of that could be subject to bulking or diluting to a degree that could not be immediately apparent?
- What do you source that is particularly expensive , scarce or in high demand?
- What do you source that is untested or via middle-men or outside UK/EU?
3. What’s your risk profile?
- Raw material quality, cost and availability
- Adulterant material cost and availability
- Profit associated with delivery of goods
- Loss and consequence associated with a failure to deliver goods
- Economic circumstance (market, corporate and individual)
- Perception of associated risk and consequences
- Likelihood of being caught
- Consequences of being caught
4. Reduction of that risk
The shorter the supply chain the less the risk of criminal infiltration. Keeping supply chains to known factors and using HACCP risk assessment templates will help to reduce the risk of food fraud.
Testing and auditing are the usual routes to also reduce risk, these will be balanced against the costs, reliability and standards but should also be based on risk assessment principles. Where is your highest hazard or likelihood of food fraud? What measures are in place to guard against this? The unannounced audit has become much more common place and valued.
Additionally, appropriate contract terms, indemnities and warranties will serve to balance the risks out with suppliers. Also, consideration of insurance for specific risks and availability of alternative (audited) suppliers and where they may be based.
An ongoing collaboration and communication throughout the supply chain, ensuring suppliers are aware of the demands on your product and so are prepared for corresponding supply chain peaks and troughs may assist supply pinches. Sometimes, the stability of an order over a longer duration can help both parties. Would a reduction in payment time assist the supplier in the short term to ensure maximum quality of supply?
5. No such thing as a free lunch
The old adage that if something seems too good to be true, it usually is, will always apply. As an established food business, if a supply is provided below market value or if a product that was simply not able to be sourced and is somehow now in immediate supply, the onus will be on you to carry out additional checks to ensure it is legally compliant.
Other options would be to alter what is said about your own product – don’t make those voluntary claims if they cannot be substantiated.
Finally, the ethics of supply should not be forgotten. The Modern Slavery Act 2015 was put in place to ensure that companys who are sourcing supplies have their own responsibility to risk assess their supply chain for breaches of modern slavery. Working practices need to be fair, safe and responsible. The food fraud criminals will be less likely to have the same ethics.
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