Horse meat scandal as milestone
Until today the horse meat scandal of 2013 has still an impact in Europe. At that time food controlers found horse meat in hamburgers and lasagne. First in the United Kingdom and in Ireland, and a short time later in Germany. According to investigations the horse meat came from Romania. It was declared as beef, it arrived as part of manufactured products in broad parts of Europe and the deal was coordinated in the Netherlands (s. illustration).
Human health was not affected. The horse meat scandal was particular because it revealed the complexity of the supply chain for manufactured products. And it became obvious, that each part of the chain must be safe guarded.
The European Commission put food fraud in first place on its agenda, installed a network of food experts and recommended a special monitoring of honey, fish and horse meat. The food producers started rethinking the topic. Food fraud causes financial and image losses. Many producers realized that it is not enough to simply react on incidents. They started analyzing the risk for their company resp. their products, to be better prepared for food fraud. And what is the reaction of the consumers?
The accountancy firm Crowe Clark Whitehall asked 1,129 Brits between 16 and 75 years for their opinion and published the results in January 2018. The main result is that consumers wish more transparency. Food producers could increase consumers’ trust by creating transparency.
Consumers expect producers to forward information to the authorities at an early stage
If food fraud can cause health damages, 64 % of the consumers expect that producers share their information with authorities. 49 % expect this also if the incident can lead to financial losses. 35 % want the authorities to be informed if the incident can cause financial losses for the own or another branch.
42 % of the consumers support the idea that producers should contact the authorities in the case of a suspected case. Food fraud might be difficult to prove in a single situation, the products are often already sold and eaten. The situation would be suboptimal, if a producer passes the information on to the authorities only when the food fraud is proven. The authorities need as much information about food fraud as possible. This is in accordance to the idea behind consumer protection and sharing knowledge would meet the consumers’ expectations. Sharing information brings benefit for everyone – but the fraudsters.
Consumers expect from producers more detailed information by the authorities
So far the producers reveal less information as the consumers expect in the case of an incident that could pose a risk for human health (76 %) or could lead to financial losses (55 %). The authorities only get to know which kind of product is affected by which kind of fraud and which parts of the supply chain are involved. Normally the authorities cannot conclude which company or which product is subject of food fraud. Consumers would prefer that producers pass the complete information on to the authorities, including the product, involved companies and persons. Not only in a proven case but already in a reasoned suspicion case.
Food fraud monitoring as corporate task
Fighting fraud effectively requires to treat this topic like other corporate tasks. This means that operations have to be recorded, measured, monitored and analyzed. The data analysis leads to results. Results are changes that influence the resilience of the company and lead to decreasing cost of fraud. The monitoring provides information about type and quantity of the fraud and about progress in protecting the company.
Food fraud causes financial losses. Companies have always measured their cost and like any other type of cost they will try to reduce the cost caused by fraud. From this perspective food fraud as a cost factor in the company is quite new. But you can already determine the magnitude. According to experts fraud leads to financial losses of about 5.85 % of turnover. The company can cut this by up to 40 % in two years by introducing appropriate counter fraud practices.
Most fraudsters are insiders. Information from insiders can thus be helpful to prevent or to solve food fraud. Installing a hotline for whistleblower can be an important tool for the companies. Whistleblowing means that employees or contractors report suspected wrongdoing at work while using different channels. They can report their observations to somebody inside the company or to authorities.
Companies with a strong anti-fraud culture have embedded a whistleblowing system across their organisation. They have a whistleblowing policy and make sure that employees, contractors and customers know about relevant details.
78 % of the consumers support the idea that companies should also spread information about whistleblowing systems that are provided by the authorities. 72 % are in favor of the idea that the companies would sponsor the public whistleblowing systems.
Opinion of the consumers mostly neglected
Normally food fraud is a topic that is dealt by authorities and food producers. With this survey, Crowe Clark Whitehall did add a new perspective. The actors should not neglect the consumers’ opinion. Only consumers who trust in the food system are good and loyal customers.