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Companies should collaborate to fight food fraud: Report

By Caroline Scott-Thomas , 08-Feb-2010

Greater collaboration and information sharing could help the food industry tackle food fraud, according to a new report from the Grocery Manufacturers Association (GMA) and consulting firm AT Kearney.

The past few years have been marked by a rash of food contamination scandals, with the GMA naming the Chinese melamine incident as the final straw that demonstrated the far-reaching consequences of economic adulteration for consumers, companies, industries and countries, including fatalities and bankruptcies. The organization says in this new report, entitled Consumer Product Fraud: Deterrence and Detection, that industry can and should learn from these failings in the food safety system.

For example, the deliberate melamine contamination of milk products in order to make protein levels appear higher should cause manufacturers to ask themselves whether their product portfolio contains protein-rich ingredients and how these could be altered in the future, the report said.

“Recent incidents call for improved safety programs. This does not necessarily mean spending more money on food and consumer product safety, but it does mean redefining actions and rethinking resource investments,” it said.

Developing collaboration

In particular, it claims that industry could save $50m-$80m a year by sharing supplier audits, and suggests that although leading companies already share information on an informal basis, they could collaborate on many more levels.

The food industry could follow the example of the pharmaceutical industry, for instance, which has a consortium involving biotech and pharmaceutical manufacturers and suppliers to facilitate information sharing. In the same way, the food industry could establish a clearinghouse of suppliers, collaborate to create monograph standards for ingredients – which can be a prohibitively expensive process when companies aim to develop their own set of ingredient standards – and develop a shared library of reference samples.

Forget competition fears

“Although some food, beverage and consumer product companies hesitate to share data for fear of revealing a competitive advantage, food quality and safety standards should not be seen as a competitive advantage,” the report states. “When an incident occurs, the impact can be felt across the entire global industry.”

It goes on to weigh the cost of both proactive and reactive approaches to product contamination, and concludes that the relative cost would vary according to the type and size of different companies – it is not ‘one size fits all’.

However, with the cost of one adulteration incident averaging two to 15 percent of a company’s yearly revenue, depending on company size, the value of examining the vulnerabilities of a product portfolio is clear.

The full GMA/AT Kearney report can be accessed online here .

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