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For most consumers, it is easier to recognize a faux designer handbag on a vendor’s stand than it is a bottle of imitation honey, olive oil, apple juice or cognac in the grocery store.
On Friday, during the American Bar Association Annual Meeting in Boston, legal experts said the counterfeit food industry is on the rise. The economic impact of it is anywhere from $10 to $15 billion dollars, according to statistics shared from the Grocery Manufacturers Association.
Panelists described food fraud as “the intentional adulteration of food with cheaper ingredients for economic gain, species substitution, or misbranding or mislabeling of food. These risks most often lead to public health risks.”
“This is a huge issue for companies,” said panelist Sheri Littlefield Moreno, general counsel for GE Intelligent Platforms.
Moreno said nearly 60 percent of food and beverage companies were affected by a recall in the last five years.
Referencing the Federal Drug Administrations’ daily email notifications about food safety recalls, Moreno said, “There are so many, it’s astounding.”
Noting that not all of the recalls pertain to contaminants or fraudulent products, Moreno said recalls “can be incredibly expensive to the companies,” which ultimately affects shareholder value.
Since the Food and Safety Modernization Act of 2011, Moreno said the stricter Food and Drug Administration rules on food safety are an opportunity for companies to do a better job at controlling and tracking products.
She said companies are starting to use traceability as a marketing strategy and that it’s important to consumers to know where the product came from and whether the product is it what it should be.
Moreno said the software her company produces helps companies go from managing recalls to preventing them all together. GE’s Intelligent Platforms is automation software that controls processes. The software offers real-time operational intelligence.
“You don’t have to sit at a control center or wait to be notified about what is happening in the plant,” Moreno said. “You can be notified while you’re walking through the plant that the pH on this particular test has come in high and you need to quickly go back and change what you’re doing.”
She said the software could also identify when substitute ingredients are being used. Knowing where an ingredient originated is important. “The software affords that kind of genealogy and traceability,” Moreno said.
The panel agreed that new advances in supply chain technology are critical in preventing recalls, illnesses and in some cases death.
Panelist Kelvin Harris, director of Supply Chain Resilience for Pricewaterhouse Coopers, said companies are starting to understand the importance of supply chain data.
Harris said companies are working harder using scientific capabilities such as DNA testing to help authenticate ingredients. He and Moreno agreed that companies have to work to better understand its supply chain to effectively manage food fraud risks.
Panelist Brendan Flaherty, a trial attorney at PritzkerOlsen, P.A., specializing in litigation involving food poisoning, explained the plaintiff side of civil litigation in food-borne outbreaks and Panelist David Ernst of Davis Wright Tremaine LLP, who has represented national restaurant chains and manufactures in cases involving outbreaks and contamination including E.coli and salmonella, provided the defense perspective.
Moderator Andrew Boutros, assistant U.S. attorney for the Northern District of Illinois, said that food fraud and food importation fraud sometimes leads to criminal charges.
Currently, Stewart Parnell of the Peanut Corporation of America in Georgia is on trial for knowingly shipping salmonella-tainted goods. This is the first federal criminal trial associated with food-borne illness.
The session, “Don’t Play with Your Food: The New Federal Crackdown on Food Fraud,” was sponsored by the ABA Criminal Justice Section.