The fiprinol in eggs scandal in August illustrated again the reach of global supply chains. Similarities with the horse meat crisis in the beef industry are being made and the industry is once again under scrutiny.
The use of the insecticide, which is banned for use in human food production, on Dutch and Belgium farms ended up contaminating eggs that then entered the food chain and were sold across Europe. Some 700,000 eggs have been recalled and destroyed in the UK alone. Up to 15 EU states and Switzerland and Hong Kong are also believed to be affected.
The scandal encompassed all elements of the food and drink sector market:
- Lowest price versus shortened supply chains
- Squeezed margins versus quality
- Industrial production v welfare
- Extended supply chain versus clear audit chains
- Confusion between different regulatory bodies within Europe as to who was meant to be doing what
An investigation will be carried out as to whether or not this was a deliberate breach of the regulations to cut corners and so costs. A Dutch company, ChickFriend, and a Belgian firm, Poultry-Vision, are both under investigation.
The UK’s own National Food Crime Unit NFCU defines criminality of this kind in the food chain as follows:
- Food fraud: A dishonest act or omission, relating to the production or supply of food, which is intended for personal gain or to cause loss to another party.
- Food crime: Dishonesty relating to the production or supply of food, that is either complex or likely to be seriously detrimental to consumers, businesses or the overall public interest.
Food fraud becomes food crime when the scale and potential impact of the activity is considered to be serious. This might mean that the criminal activity has cross-regional, national or international reach, that there is significant risk to public safety, or that there is a substantial financial loss to consumers or businesses.
In this instance, it is accepted the levels are so low as to pose no risk of injury to human health but clearly the incident has had global impact and created chaos in the egg industry.
The investigation is likely to centre upon whether there was “dishonesty” ie, an intentional act to use the fiprinol by egg producers, pest controllers or suppliers of the cleaning products and what actions of due diligence were taken both by those parties themselves but also those further up the supply chain.
Selling food not of the nature, standard or quality demanded is a strict liability offence. That means there does not have to be any intention or knowledge behind the act. However, there is a defence if it is due to the act or omission of another and if all reasonable precautions and all due diligence to avoid the commission of the offence is taken.
Therefore those within the supply chain will need to actively review their due diligence processes:
- Were appropriate checks of suppliers and products carried out?
- Was the price of the eggs significantly reduced so as to put those buyers on notice to investigate further?
Similarly those involved with processing ingredients from a range of sources and/or with extended supply chains might take this as an opportunity to revisit their own systems.
“Death by audit” is a familiar refrain; however if an incident of this kind were to take place on “your” watch, you would be happy to have every written check and balance illustrating your systems available to protect both yourself from individual criminal prosecution as well as the company.
The recent prosecution, also in August, of those involved in fraud in the horse meat contamination centred around the false accounting and record keeping with the aim to boost profits. In this instance no buyers or retailers of the products have been prosecuted but the sentencing guidelines for offences of food safety list as aggravating factors any breach of strict liability food safety offences and anything that provided a commercial advantage to the individual. Therefore food producers are reminded that if a product is being offered at less than cost price for its competitors or at a discount to the market price there is no such thing as a free lunch and further scrutiny is required.
If the use of this banned substance was a deliberate act that was covered up in the records, there is no guarantee that food security and British produced produce would insulate our own industry from a similar crisis. However, in light of this, voluntary claims of origin for all foods are likely to have added attraction to the consumer, illustrating as they do shortened supply chains and full traceability and transparency.
Our April 2017 edition of Legal Ingredients made three predictions for the year ahead, one of which was “there will be more scandals”, it was advised “producers will need to ensure they keep their product checks up to date and have good business continuity arrangements for secondary suppliers.” This has served correct sooner rather than later and remains crucial advice for the remaining year.