With consumer confidence starting to recover and horsemeat starting to fade into a memory, salmonella outbreaks started to hit the headlines and the Elliott Review was finally released to bring matters back into consciousness.
It has been a tumultuous couple of years for the food industry. Not only have there been vast arrays of new legislation to grapple with, but there have also been several food scandals that have rocked the core of the food supply chain; begging questions about how things should be arranged in the future. Frozen food products were some of those to suffer most at the hands of horsemeat.
What did we learn?
The Horsemeat scandal underlined how complex and global the food supply chain has become. It also underlined how difficult it can be to manage the issues that arise not just with the immediate supplier of the ingredients but with the supplier’s supplier – and, in some cases, the supplier’s suppplier’s supplier’s supplier, which may be located on the other side of the world. Again, global supply chains are nothing new, but there were those that argued that such supply chains were out of control and that we should buy locally where we can easily trace provenance – and some retailers, such as Tesco, announced a plan to switch to British sourcing.
It led to an unprecedented level of consumer awareness, with consumers routinely checking labels for countries of origin and caring more than ever about what the label said. This localism argument appeared to have some weight; however, it put strain on the British supply chain as all parts were not necessary capable of supplying the demand. Then, with some UK based food companies being investigated for fraud, it became apparent that fraud can occur anywhere.
Following the horsemeat scandal, there were the inevitable calls for more legislation to prohibit horses being passed off as beef. This is known by the somewhat macabre name of “tombstone regulation”. We argued strongly at the time that this simply wasn’t necessary as there is a plethora of existing law aimed at preventing this. While there was not a specific offence of putting horse in a product described as beef, there are a handful of offences that prohibit misleading descriptions on food. That of course ignores the obvious offences like fraud that already exist in criminal law. At a time when the government is committed to a one in and at least one out policy for regulation adding more offences was simply not appropriate.
While there were already clear systems in place with suppliers signed up to contracts and required to meet exacting standards together with submitting to auditing regimes, there were however still things that could be done to improve the supply chain, and make it more difficult for those intending to perpetrate a fraud to get away with it. These include updating the BRC and other Audit standards to allow this issue to be more closely managed.
It also needed to be borne in mind that no due diligence system is perfect. Sometimes those intent on perpetrating fraud will find a way to defeat even the strongest system; that is after all the purpose of a fraud. It also doesn’t follow that just because it has occurred that the retailer is guilty of an offence if they have done all that they could to avoid it.
Elliott review
Against this background, Professor Elliot set about meeting with industry and advisors, including some lawyers (my colleague Hilary Ross was one such lawyer consulted) and came up with 47 recommendations that were published in the interim Elliott review which was published towards the end of last year. For many months it was rumoured that it was “too good” to be finally released and there was much media speculation that it would not see the light of day after its planned release in July was postponed.
In the intervening months more food crises, like the salmonella outbreak occurred.
September 2014 finally saw the publication of the Elliot review. The review recognises that the supply chain is incredibly complex and very often that food fraud is an organised and sophisticated crime. His final report sees the number of recommendations drop from 47 to just 8, however, there are many other “comments” throughout the document that are recommendations without a formal label.
The Elliot Review envisages a system based on what Professor Elliot calls the eight pillars of food integrity:
• Consumers First,
• Zero Tolerance,
• Intelligence Gathering,
• Laboratory Services,
• Audit,
• Government Support,
• Leadership and
• Crisis Management
The biggest headlines came from the recommendations around the creation of a new Food Crime unit and attendant intelligence gathering operations. However, the sections on Zero Tolerance and Audit also contain some very significant recommendations.
Food crime unit and intelligence
Some might find it surprising that the UK does not have a food crime unit when most other EU member states do. Perhaps this is reflective of the effectiveness of Trading Standards and Environmental Health officers in the UK. Professor Elliott envisages a system similar to this that builds on traditional trading standards skills with the force of policing in order to be able to properly investigate fraud and other similar crimes.
A key part of this will be making the system intelligence led. Professor Elliott wants to create a system where there is more open and free intelligence sharing. In particular, he wants an anonymous intelligence hub to be set up that allows the FSA to work with the research sector in order to horizon scan for key indicators that might help identify potential fraudulent activity and feed this into the Food Crime unit.
He envisages a lot of information coming from industry and wants the sector to share information on areas of concern. This raises a number of questions about how keen industry will be to share this information, whether anonymously or otherwise. Professor Elliott also calls for the creation of a central register of food convictions to be maintained by the FSA. It’s believed this will create a name and shame type penalty for those on the register. Similarly there is also a call for increased fines for breaches of food law and suggestions that the Sentencing Council should publish guidelines recommending tougher penalties.
Proving that all is OK
Clearly sourcing presents many issues for industry and every business wishes to get the best deal and achieve the highest margin for its products.
Professor Elliott believes that this is part of the issue and calls for an end of what he calls a culture of adversarial procurement. He suggests that Industry incentive mechanisms should reward responsible procurement practice. He goes on to suggest that if products are purchased for below the recognized market price, then the retailer would need to produce evidence that it checked that there were no grounds to suspect the products were counterfeit or adulterated – this goes way beyond what is currently done or necessary.
Auditing
The Report also makes extensive recommendations in relation to auditing. The key points are discussed below.
• A modular approach to auditing, with a core food safety and integrity audit recognized by the Global Food
Safety Initiative (GFSI) and agreed by major retailers and standards owners. In addition to this core audit, individual retailers would design their own specific modules which focus on their business priorities, which would be conducted at the same time. The Final Report recommends that once an audit scheme has earned recognition from the FSA, the food businesses subject to it gain from having fewer local authority inspections saving them time and money.
• It is recognized that the auditing regime has, in some cases, become an industry in itself, and as a result, there is a danger that an audit regime can be used to raise revenue, placing unnecessary costs on food businesses. The Final Report recommends that the Government encourages industry to reduce burdens on businesses by carrying out fewer, but more effective audits and by replacing announced audits with more comprehensive unannounced audits.
• Industry and regulators are to work together to develop specialist training for employees and auditors to assist with detecting food fraud and dishonest labeling.
• The Final Report highlights the risks of food fraud taking place in storage facilities and during transport when food is vulnerable to tampering and so industry is required to incorporate storage and transport into the auditing regime.
• Currently there is no requirement on auditors to carry out product sampling as part of a standard food safety audit and again, conscious of costs to the industry, it is noted that sampling introduces an additional cost burden to businesses. However, the Final Report points out that sampling is not the same as testing, and sampling will provide a significant deterrent as fraudsters will not know when or if testing will take place, nor which products are being sampled. Therefore, Professor Elliott recommends that the Government encourages third party accreditation bodies undertaking food sampling to incorporate surveillance sampling in unannounced audits.
So how great is the need for change?
Whether it is labeling issues or food safety issues, from time to time issues occur. A recently high profile salmonella outbreak illustrated this point.
In the first outbreak, reported at the end of August, cases of Salmonella Enteritidis were reported by Austria, France, Germany and the United Kingdom. The microbiological analysis undertaken was able to identify that the likely source was egg and specifically that there was a common link to an egg packaging centre in southern Germany.
It is interesting to consider how much more easily and effectively food traceability systems can operate in the context of safety. In the salmonella case, food businesses were able to interrogate their traceability systems and this led to the conclusion that the various cases were linked.
The EU reporting concluded that the swift investigation and actions taken by the sector appear to have stopped the distribution of the contaminated food to the market, albeit that the report does suggest that the delay in reporting may have resulted in more cases than there needed to be. Protecting food safety is a clear and obvious need and an area in which business has invested and systems and checks are sophisticated. However, the traceability required to identify the
German egg packing plant is no different from that necessary to determine the source of any other ingredient in the product – so industry can and does do this.
A brave new future or not much change?
The industry has weathered those calling for rafts of new legislation in this area. This was unnecessary then and remains unnecessary now. However, for some supply chains, due diligence did need a review and auditing is one area in particular where some upgrades would be beneficial.
It remains to be seen how the balance of the Elliott review changes will be implemented. Many areas have funding issues so perhaps we may see challenges there, but one thing is for sure, no one in the industry wants to see another horsemeat scandal any time soon.