Bridging the gap between food fraud and food security
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July 26, 2023 - From 2021 to 2022, the food sector encountered complex global issues that not only strained operations but also resulted in weakened crop yields. Additional disturbances involved critical ingredient supply disruption and fertilizer and energy shortages that impacted the ability to plant, harvest, and transport crops.
These incidents had cascading implications on the food supply chain, with a rise in counterfeit goods and consumer illness due to food fraud, and security concerns driven by inflationary pressures and the rise of sophisticated cyberattacks. These strains have created a vulnerable sector that continues to attract threats, including food fraud and insecurity within the supply chain.
Food fraud is the intentional deception of food and beverage products. Consumers can be misled to the true nature and makeup of a product by tactics such as:
- Substituting an ingredient for a cheaper one.
- Tampering with labels or expiration dates.
- Diluting or intentionally contaminating food products.
- Misrepresenting the geographic or cultural origin of a food product.
Food fraud has the potential to cause considerable health risks to consumers as well as economic losses for food and beverage manufacturers and retailers.
Due to geopolitical factors like the war in Ukraine, agricultural products have become scarce and food fraud has risen. BSI's tracking of food fraud from 2021 to 2022 exposed its prevalence across all regions from APAC, Americas, Europe, and MEA. Russia emerged as the top country of concern, contributing to 23 percent of incidents. In Vietnam, authorities seized 810 sacks of soybeans with counterfeit trademarks weighing nearly 40 tons in late March 2023 from a facility in Phuc Tho, Hanoi.
Additionally, complex global issues affecting grain-producing regions have resulted in low grain yields, in turn increasing the thefts of agriculture products along with food fraud incidents. For example, in December 2022 authorities seized eight cargo trucks carrying over 285 tons of grain from Salta, Argentina on route to Bolivia with fraudulent paperwork and an unknown origin.
BSI’s 2022 figures show that the top products stolen post pandemic included food and beverages, electronics, agriculture goods, automotive products, fuel, and construction materials.
Reported incidents of stolen food and beverage products rose from 14 percent between 2020 to 2021 to 16 percent between 2021 and 2022. This is partly due to inflation reaching its highest level in decades for many advanced economies but also to significant weather events and rising energy costs triggering global product shortages and spikes in prices for certain goods.
BSI has seen a steady increase in cyberattacks on the supply chain in general, and particularly in the food industry. Recent cyberattacks on the industry include:
- In 2022, cyber criminals based in Russia hacked a multinational meat-production company. This incident halted the company’s production in Australia and some US states.
- In another incident, a criminal group targeted a major US-based soft drink company, ransoming stolen data for $64,000.
- In February 2023, representatives from another major food company announced impacts from a ransomware attack on its operations. As a result, the company shut down production plants in North America and halted shipments to grocery stores.
The food, beverage, and retail industries can affect positive change by implementing a variety of measures to prevent and detect food fraud while ensuring the safety and security of the food supply chain. Such measures include:
- Supply chain risk intelligence. The foundation of any food fraud and security program is understanding where risks exist in the supply chain. This is done by looking at historic data to identify trends and using real-time alerts to adopt a proactive rather than reactive approach in tackling food fraud and security risks and incidents.
- Supplier risk management. An understanding of suppliers and the supply chain will help implement measures that ensure the authenticity and quality of ingredients at each stage of the process. This includes forming strong protocols for auditing suppliers and tracking products throughout the supply chain.
- Testing and detection. Investing in advanced testing and detection methods will help identify fraudulent activity in the food supply chain. This includes testing for common additives and contaminants as well as implementing technologies such as blockchain and DNA analysis to verify the authenticity of products.
- Increased transparency and communication. Food, beverage, and retail organizations can increase transparency with consumers, customers, and regulators regarding the steps they are taking to prevent fraud and ensure food security. This includes leveraging new innovations that offer product legitimacy and tracking whilst providing clear labeling and ingredient information.
- Collaboration with stakeholders. Working collaboratively with relevant stakeholders, including government agencies, law enforcement, customers, and consumer groups, helps to identify and address food fraud and security issues, incidents, and risks. This includes the sharing of information, cooperating with investigations, and developing joint initiatives to address wider industry risks and emerging issues.
By implementing these recommendations, organizations can take proactive steps toward fortifying their operations and ensuring the integrity of their supply chains in an increasingly complex landscape.
For real-time updates on top supply chain issues, register for BSI’s Connect SCREEN tool; this platform provides daily analysis on the latest and most relevant global supply chain trends. Read more on food security in Is the food sector prepared for cyberattacks? For more supply chain, digital trust, and environmental, health, and safety topics that should be at the top of your list, visit BSI’s Experts Corner.