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UK Report Reveals ‘significant’ Cost of Food Fraud

The cost of food fraud in the United Kingdom is significant and takes many forms, according to a report.

Analysis found the cost of food fraud to consumers, businesses, and government is between £410 million ($504 million) and £1.96 billion per year ($2.4 billion).

Including prevention costs, the burden of food crime on businesses is £268 million ($330 million) per year, more significant than the burden to the government of £84 million ($103 million) and individuals of £58 million ($71 million).

Excluding prevention costs, the average is estimated at £87,000 ($107,000) for minor cases and £4.3 million ($5.3 million) for significant cases. Each case is estimated to cost between £16,000 ($19,700) and £151,000 ($186,000) for minor cases and between £423,000 ($520,000) and £7.2 million ($8.8 million) for more significant cases, depending on food and crime type.

Modeling food crime
Incidents involving meat or alcoholic beverages tend to cost more. Some of the costliest large cases involved waste diversion of meat and fish unfit for consumption. This is because of the volume of food involved. 

There were 610 food crime intelligence reports processed by the Food Standards Agency (FSA) in 2021, but the total number of cases could be as high as 3,050 in the UK each year.

Three approaches were used for the cost of food crime model: a review of relevant reports in the public domain, 24 interviews with people from different organizations, and data from a survey of 700 small firms. The base year was 2021.

The operational cost of the National Food Crime Unit (NFCU) was £5.8 million ($7.1 million) in 2021.

The research found no examples of food fraud in the large business sector. Findings suggest much of the industry has built resilience to fraud because it invests in quality and regulatory compliance controls, including testing that identifies non-compliance.

However, the small business sector is vulnerable to food fraud despite low incidence rates.

“Food businesses are the first and most important line of defense, and we want to support them. This is one of the reasons we launched a working group to explore whether some areas of our collective response to food crime can be improved. Together, we’re making it easier to share intelligence and information by helping people in the food system to share their concerns with us freely and confidentially,” said Emily Miles, CEO of the FSA.

Whistleblower phone number and other efforts
The FSA has also launched a whistleblower hotline where people can report suspected food fraud.

Another focus is on third-party assurance schemes’ role in sharing information with regulators. The agency has previously worked with FSA-approved schemes like Red Tractor, but this is being expanded to other assurance systems that have agreed to send data to help prevent food fraud. Initially, details of businesses removed from their schemes will be shared.

FSA has also refined the format of alerts to help businesses check their supply chains without jeopardizing any criminal investigations.

Another report highlighted ways to complement existing food fraud prevention work and strengthen defense against fraudsters. Researchers conducted a literature review and 16 interviews with professionals working on food fraud or crime.

They found that reactive detection dominates at a food business level, mainly where financial, knowledge, and time resources are limited, instead of preventive strategies. 

Increasing routine surveillance, more transparency, stricter penalties for fraud, guidance, and education were also mentioned. 

“Due to the complex nature of the contributory factors that can lead to food fraud, there is no single silver bullet solution and no sole guardian who can eliminate fraud or deliver effective food fraud prevention strategies.”

Source: FSN