22 November 2018

Food fraud: Unveiling the results of an unprecedented pan-canadian study among the food industry players

Expired food being repackaged, vegetable oil added to olive oil, a mixture of chalk and food coloring sold as turmeric… food fraud is a growing evil in the agri-food industry and represents more than ever a prevailing key issue within the supply chain, from producer to distributor. In Canada, the key players of the agri-food industry believe they have a very good knowledge of the food fraud definition, but only 43% of them claim they are quite or completely confident in their abilities to detect a fraudulous case. Globally, the food supply chain key players perceive themselves as fairly regulated and seem rather aware of their responsibilities towards the consumer.
These findings are highlighted in an unprecedented newly released national study on food fraud conducted by CIRANO in cooperation with INAF (Laval University) and CRIBIQ with 400 businesses representing the agri-food industry.
« Food fraud represents a real challenge for this industry and our study allows to better understand the issues and concerns of the agri-food industry about fraud, but also documents the practices of various players in the prevention and detection of fraud », explains Nathalie de Marcellis-Warin, co-author of the study, President and Chief Executive Officer at CIRANO and professor at Polytechnique Montreal.


A good understanding of what food fraud is
The food chain key players have a good knowledge of what constitutes a food fraud regardless of the sector (producers, processors, distributors, retailers). « Apart from the unauthorized reproduction and imitation of a brand, packaging or of a recipe, the actions constituting a fraud are recognized by more than 90% of the players », states Yoann Guntzburger, co-author of the study and postdoctoral researcher at CIRANO.

Low knowledge in food fraud related regulations and low level of confidence in fraud management by the governments
34% of respondents state they have a limited or very limited knowledge of the federal regulations on food fraud. This ratio is even higher for the provincial regulations: 40% of respondents have a limited or very limited knowledge of their provincial regulations. In the same way, on average, for all of Canada, there is less confidence in the management of fraud by provincial governments than by the federal government.
An interesting fact, producers have the lowest level of knowledge of regulations: 40% of the respondents have a limited or very limited knowledge of the federal regulations vs. 27% for processors and 28% for distributors.
The producers are also the largest group of the agri-food supply chain players to have no confidence in food fraud management by the government.

Agri-food supply chain players are aware of their responsibilities towards the consumer and perceive themselves as fairly regulated by governments
If the majority of the players perceive their sector as being fairly regulated, a few perceive it as too highly regulated. « The various groups of players tend to perceive other groups as not sufficiently regulated. Moreover, when questioned on their responsibilities, for example those of ensuring the authenticity of the products received from their suppliers, there are noticeable differences among the various players », says Virgie Barrère, co-author of the study and Research Associate at INAF. The results demonstrate that food processors are more aware of their responsibilities towards fraud prevention within the supply chain. In fact, 90% of them believe that it is their responsibility to ensure the authenticity of products sold directly to the consumers, 93% to ensure the authenticity of the products they receive from their suppliers and 87% to ensure the integrity of the practices of their contractors. These percentages are lower for producers and distributors. « However, when the direct customer is not the final consumer only one business out of two (regardless of who the player of the food chain is) believe they are responsible for the authenticity of the products, once those are transformed and resold by an intermediary », says Yoann Guntzburger.

Even if fraud is seen as more frequent outside Canada, the Canadian agri-food industry is aware of the consequences it can generate locally
« Whether we talk about the risk of food fraud in terms of the number of fraudulous products or the consequences of fraud on health or on the economy, Canada is perceived as being more immune to the occurrence of fraud than the rest of the world by the actors of the agri-food supply chain » says Ingrid Peignier, co-author of the study and project manager and Partners Relations and Communications Director at CIRANO. There is however an awareness of the consequences of fraud within the agri-food industry in Canada. The Canadian businesses are also sensitive to the fact that they may be involved or victims of fraud. The safety feeling is however heterogeneous within the supply chain:

  • Producers feel more secure from food fraud (33% of all players in the agri-food chain in Canada consider their business to be safe from food fraud, but it's 42% of Canadian producers), and
  • Distributors see themselves as more victims of fraud (35% of all players in the agri-food chain actors in Canada feel it is likely they have already been victims of fraud in the past, but it’s 48% of Canadian distributors).

Fraud prevention practices much more known and used than detection practices 
The agri-food businesses can implement fraud prevention measures (i.e. a robust ingredient traceability system). Among those measures, companies have the opportunity to use analytical fraud detection methods. « We clearly notice that prevention practices are well known (68% of businesses in Canada report having a medium to very advanced knowledge of those practices); simultaneously, detection practices are lesser known and not as widely implemented while they are perceived as effective » underlines Yoann Guntzburger.
« In terms of preventive measures, the traceability systems of the supply chain seem to be the practice of choice selected by businesses to prevent fraud. 72% of businesses declare using this practice. This proportion rises to 94% if we consider only the transformers », points out Ingrid Peignier. 79% of businesses rely on long standing close relationships based on confidence as a fraud prevention practice compared to their suppliers. The same result is also seen when businesses are being questioned on their approaches when they suspect a fraud risk implicating their suppliers: 69% of businesses discuss the issue directly with their suppliers. However, it is worth noting that only 39% of businesses would advise the federal or provincial authorities if they suspected a fraud risk with a supplier.

« Except for the traceability system, the fact that Canadian agri-food chain companies implement certain measures while considering more efficient ones leaves us perplexed. For example, vulnerability analysis is the third most efficient practice, but only 36% of companies use it (the first practice judged the most effective being the supply chain traceability system and the second, the implementation of detection technologies). The implementation of such measures seems however to be too expensive and require too much time and resources », says Samuel Godefroy, co-author of the study and professor at Laval University. While there appears to be good confidence in the laboratories, 77% of companies never or rarely test for the presence of food fraud.

« In conclusion, the results of this study, coupled with the increasing number of frauds revealed in the media, highlight the necessity to further speak out about food fraud. In addition, this necessity is strongly approved by the agri-food supply chain actors who consider that fraud is an issue which has not been sufficiently addressed, mostly outside the business, i.e. by the agri-food industry but also by the government and public opinion », argues Nathalie de Marcellis-Warin.

For more information the study
The CIRANO-INAF-CRIBIQ study is based on an online survey conducted from October 2017 to April 2018. 398 businesses responded to that 20-minute questionnaire. Representative sample by sector (producers, processors and retailers) and region (Atlantic, Quebec, Ontario, Prairies ans British Columbia), independently.
Researchers associated with this research: Nathalie de Marcellis-Warin (Polytechnique Montréal and CIRANO), Ingrid Peignier (CIRANO), Yoann Guntzburger (CIRANO and Polytechnique Montréal), Samuel Godefroy (Université Laval and INAF), Virginie Barrere (Université Laval and INAF) and Catherine Dhont (CRIBIQ).

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