Uncovering the Secrets of the Global Food Industry

Uncovering the Secrets of the Global Food Industry

. 7 min read

In times of macroeconomic uncertainty, environmental disruptions, and growing supermarket and retail power, the global food industry faces enormous consumer demand and supply chain pressures. Such external circumstances often lead to higher food prices and inflation, incentivizing producers and supply chain participants to partake in the corrupting food fraud business—an obscure and intractable problem that the global food industry is combating. Food fraud impacts an estimated one percent of the global food industry and could cost up to US$40 billion annually. In addition to such high financial losses, food fraud can directly harm consumer health and erode customer trust in the industry.

The Food Safety Net Services defines food fraud as the economically motivated or malicious “act of purposely altering, misrepresenting, mislabeling, substituting or tampering with any food product at any point along the farm–to–table food supply chain.” Around the world, cases of food fraud are increasing at an alarming rate. Between 2016 and 2019, cases of suspected fraud in EU countries increased by 85 percent. Unfortunately, given recent social, political, and economic changes, such as the COVID-19 pandemic, food fraud cases are expected to continue rising globally.

Global Influence

The 2008 melamine-tainted infant milk scandal in China shocked the world and uncovered the lethal and boundless effects of food fraud. Sanlu Group, one of the largest and most popular infant formula producers in China at the time before declaring bankruptcy, adulterated milk by adding melamine to make the infant formula appear as higher in protein content to pass standardized tests. Melamine is a chemical compound approved in the US for the industrial manufacturing of plastic products. Unfortunately, high melamine exposure is associated with the development of kidney stones as well as other health issues. ​These unethical and irresponsible actions reflect the company’s prioritization of profitability over consumer health—this food fraud ultimately sickened at least 300,000 children and killed six infants.

Unfortunately, food fraud cases are still a common reality across different regions of the world and still manifest in different forms. In 2013, Ireland’s Food Safety Authority tested DNA samples from frozen beef burgers and other food packages. Instead of beef, a third of these frozen food items contained horse meat, while 85 percent also contained pig meat. This incident reveals yet another form of common food fraud: the substitution of ingredients with cheaper ones, often to cut costs. Despite stricter regulations imposed after the scandal, horse meat substitution is still a problem. In 2022, 41 individuals were arrested for similarly illegally selling horse meat in Spain, Germany, Italy, and Belgium.

While food fraud has occurred throughout history and in recent years, there has been an upward trend in cases, especially after the COVID-19 pandemic. From the first half of 2019 to the same period in 2020, food cases are estimated to have increased by 37 percent. Markets that were already vulnerable to fraud due to more lax regulations may be hit the hardest by the effects of food fraud. In Sub-Saharan Africa, the use of toxic chemicals and pesticides in food markets is a prevalent and increasingly concerning problem. Veterinary surgeon Serge-Claire Nkolo explains how many traders in the fishing industry drop gamalin, a highly toxic pesticide, in the water to collect the fish. This pesticide is so powerful that soon after dropping the chemical into water, fish and other organisms start floating, dead from the poisonous substance. These animals are then collected to be eventually sold to the general public. Another chemical, sodium benzoate, has also been used in Ethiopia to preserve the popular food injera– a staple spongy bread in Ethiopia and Eritrea— for longer periods, and thus increase profits. While these practices had occurred before, the combination of pressured supply chains and transport networks because of the pandemic has exacerbated ongoing food industry issues in the region. More specifically, because of the pandemic, many authorities around the world mandated food inspectors and auditors to stay at home. While may have been necessary measures to take in a time of such uncertainty and insecurity, they unfortunately also allowed greater leeway in corruption and fraud opportunities due to lower supervision. Arun Chauhan, lawyer and expert in fraud and financial crime, explains how the global closures of restaurants led to excess inventory that might have been sold past the expiration date by food fraudsters. Although these governmental measures may have been well-intentioned, they ultimately contributed to the immense stress that food businesses confronted at the time. As Andrea Tolu, writer of international food and hospitality, clearly points out, it is essential in the post-COVID world to work against food fraud as “a collective effort between businesses and consumers.”

Fraud in the Organic Industry

In recent years, the organic food industry especially has been experiencing a higher consumer demand for products, especially among health-conscious customers. In fact, organic food sales in the United States grew from US$26.9 billion in 2010 to US$52 billion in 2021. According to the Pew Research Center, 71 percent of Americans bought food based on nutrition and ingredient labels in 2016, showing the great attention customers pay to nutrition facts when grocery shopping. Trey Wharton is one of the many individuals willing to sacrifice parts of their lifestyles to afford organic food products. He mentions, “I pay more and sacrifice to invest my money in the foods I want.” Like Wharton, many others rely on the organic food industry to sell authentic and properly labeled products.

Unfortunately, the industry has disappointed many customers as more food fraud scandals are revealed. To explain drivers of greater fraud risks within the industry, food lawyer Baylen Linnekin writes that the organic label gives producers the “opportunity to charge consumers more for that beef or celery.” This financial boost incentivizes fraud, as corporations and farmers may be more tempted to mislabel inorganic foods as organic products. In 2018, for instance, a South Dakota farmer gained US$71 million by selling falsely labeled organic grain. In January 2023, two Minnesota farmers were also charged with selling crops grown with chemicals and pesticides as organic produce.

Detrimental Impacts of Food Fraud

Health Risks

One of the most worrisome impacts of food fraud is the potential health risks for customers. As shown previously with the 2008 Chinese milk scandal, food fraud cases can have lethal and lasting consequences. Similarly, in 2009, a salmonella outbreak in peanut butter sickened 714 people and killed nine individuals in the United States. While these scandals directly harmed consumers by causing disease—whether it was melamine intoxication or a salmonella infection—food fraud can also be harmful due to the risk of hidden allergens. Common food fraud practices such as mislabeling and substitution of ingredients can put customers at risk if they have a certain allergy with potentially lethal effects. Although fraud and dangerous food practices mostly occur for the financial benefit of food business owners, their customers ultimately pay the deadly price.

Customer Distrust

In addition to the terrible health risks, food fraud has detrimental effects on society, as more customers grow distrustful and suspicious of organic products and the food industry overall. The Center for Food Integrity (CFI) captures this reality and reveals how survey respondents ranked food companies as the least trustworthy in providing safe foods compared to regulatory agencies and farmers. Consumers’ skepticism and distrust of food companies have lately been exacerbated by social media and news headlines revealing food fraud practices and prevalence. When customers observe and learn about the various methods of fraud, such as the deliberate substitution of ingredients and food packet mislabeling, they likely grow more distrustful of the supply chain process and food industry as a whole. Revisiting the Chinese milk scandal, it is clear that Chinese customers are still scarred by the food fraud case 15 years later. Some customers, including Ms. Chen, have lost all trust in domestic companies and “only choose international brands” to improve safety.

Economic Impacts

As implied by its name, food fraud is primarily motivated by economic and financial benefits. By substituting higher-quality ingredients with cheaper ones or expediting the supply chain process through illicit and unethical practices, food fraudsters can significantly reduce costs and become more profitable. In fact, a company selling modified gardenia extract as saffron throughout Spain was able to obtain a profit of US$3.3 million, demonstrating the profitability of food fraud. While the economic and financial costs of food fraud on the global food industry are clear, consumers themselves are also impacted by the economic impacts of food fraud. Naturally, in the presence of food fraud, customers do not actually receive the product they thought they were purchasing, leading to a direct loss in their finances. Furthermore, the price of low quality goods increases when suppliers engage in food fraud. In other words, customers are deceived into paying a higher price for a good that may not have been accurately marketed. Hence, while food fraud impacts the overall food industry, its economic impacts also directly and indirectly influence consumers.

Environmental Damages

As awareness about environmental protection increases worldwide, consumers pay more attention to the unsustainable and environmentally harmful actions of corporations. Food fraud poses a great challenge to these new objectives due to its hazardous environmental impacts. The use of harmful and illegal pesticides is common in the agricultural business. Such toxic chemicals can disrupt water or soil quality, while also directly harming living organisms. For example, animals exposed to formaldehyde, a chemical sometimes used in food fraud to adulterate and preserve products for longer periods, can suffer from shorter life spans and deteriorated health. While food fraud directly impacts the health of individual consumers, it also has horrible effects on our natural world.


Given the severity of food fraud consequences and increased awareness among citizens, governments are implementing stricter regulations and methods to combat this global problem. In both the Chinese milk fraud and the European horsemeat scandal, the main culprits were punished judicially. Additionally, China and the European Union also subsequently implemented new plans and regulations to improve their food industries. For example, China promoted the Food Safety Law in 2009 and formed the China Food and Drug Administration (CFDA) in 2013. A year after the horsemeat scandal, the European Union also presented new measures to better control food fraud, such as improved DNA monitoring, inspections, and control over horse passports, which are documents to identify horses. Similarly, in response to the peanut butter salmonella outbreak in which Peanut Corporation of America deliberately sold salmonella-contaminated products, the United States sentenced the company’s CEO to 28 years in prison.

In addition to legal punishments and regulations, innovative forms of food fraud detection are being developed. One common technique being implemented across the industry is DNA-based authentication, which identifies the species of the product being sold. To test for additional chemicals that may be added to food, laboratories such as Bia Analytical, a UK food authentication laboratory, are also using spectroscopy technology. This new analytical technique measures matter’s interaction with light and is rising in popularity due to its low-cost, fast, and non-destructive characteristics. Interestingly, artificial intelligence and machine learning are also playing a more significant role. More specifically, predictive modeling can benefit the global food industry by gathering data on food fraud and contamination records. Researchers studying the influence of AI tools such as Shapley Additive Explanations (SHAP), What-if Tool (WIT), and Local Interpretable Model-Agnostic Explanations (LIME) also found that these advanced technologies could benefit the global food supply chain and better analyze food fraud risks.

These technologies will continue to play a more significant role as more individuals become aware of the harmful economic, social, and environmental impacts of food fraud globally. Although many of the food industry’s secrets have been uncovered, there is a lot more to discover about the obscure business of food fraud to ultimately develop a more trustworthy and transparent industry.