When the news broke late last week that the UK’s Food Standards Agency (FSA) National Food Crime Unit (NFCU) were investigating a fraud involving the labelling of South American meat as British, it triggered memories of the horsemeat fraud a decade ago.

While the investigation is ongoing, it is relatively localised and concentrated on a supplier of cooked meats to Booths, who have 27 upmarket stores in the northwest of England.

While this problem appears contained, it is a timely reminder of just how vulnerable the agri food sector can be to a labelling fraud.

The horsemeat fraud happened because the supply chain beyond the farm gate assumed that when traders said they were offering beef for use in the manufacture of price sensitive products, that it was beef.

However, horsemeat was an even cheaper product that, and when blended with beef, reduced the overall cost.

This allowed processors to meet the most challenging price points set by supermarkets, burger chains and manufacturers who used beef as an ingredient. Nobody along the way bothered to check if the product was what it was supposed to be.

Fake goods

There are lots of examples in consumer goods where forged replicas of high value brands are produced and sold at a lower price.

Many people, particularly in holiday destinations, have been offered what looks like a Rolex watch at a fraction of the high street price or what looks like a replica soccer shirt, again at a fraction of market value.

Experts will quickly realise that these are fakes, but some are high quality fakes and can be passed off to unsuspecting customers.

When it comes to meat, there is value in the origin of the product. In the case of beef in the UK, there is a long established premium for UK origin beef, with seven out of the top ten supermarket groups offering it exclusively to their customers.

The other three, who account for over half the trade, offer British and Irish beef.

The effect of this has created huge demand for British beef over the past decade and driven cattle price to the highest in Europe for any major beef producing country.

While beef labelling laws make it an offence to offer consumers beef labelled as British if it doesn’t originate in the UK, it doesn’t mean it couldn’t happen.

For a labelling fraud to happen, there has to be opportunity to replace a product with something of similar quality and appearance, and there must be a financial reward for the fraudster. With beef, if a Brazilian product from a carcase that has a farm gate value of €3.20kg was substituted in place of a UK product from a carcase worth €5.48/kg and a UK label applied, then there is a handsome margin for the fraudster.

Before horsemeat, nobody in the supply chain bothered to wonder how a beef product could be so cheap. After that scandal, processors, retailers and burger chains all took the issue of product integrity seriously.

Product testing and supply chain auditing is now comprehensive for processors supplying the mainstream retail and food service markets.

There remains a general wholesale beef market where the origin of the product is less important than price, but in lower value markets, the financial return on fraud is less and that in itself acts as a barrier.

While it would be wrong to say a processor and a retail or burger chain partner couldn’t conspire to commit a labelling fraud, the risk of reputational damage makes it unlikely.

A large-scale labelling fraud would require many participants, and this in itself would increase the chance of exposure.

Factories, supermarkets, burger chains and manufacturers all got a major fright with horsemeat in 2013, and as a result put in place unprecedented levels of checks and controls.

While not impossible, labelling fraud in large processors and their customers would be extremely difficult. However, complacency is always a risk, and that is why farmers and reputable factories should embrace controls that ensure product integrity.