Local producers are losing $2-3 billion annually due to product fraud, the latest estimates from AgriFutures Australia suggests, with calls for a coordinated supply chain approach to combat the problem.
AgriFutures Australia has released a new report based on research by Deakin University outlining the vulnerability of local produce such as beef, veal, fish, wine and molluscs (with an annual combined hit of between $700 million and $1.3 billion) to fraud – denting Australia’s international reputation as a ‘food producing powerhouse’.
“Put simply, product fraud deceives consumers by providing them with a lower quality product against their knowledge,” a statement from the agency said.
“Incidents of product fraud are commonly linked to shortages or constraints in the supply of raw ingredients.”
The report identified six key fraudulent practices to be driving economic losses to Australian sectors overall. Adulteration practices, concealment, counterfeiting, dilution, mislabelling and substitution were all contributing to between $2-3 billion in loss to the Australian economy every year.
Georgie Townsend, manager of rural futures, said that ultimately producers and businesses along the supply chain were losing out, with fraud resulting in lower returns and running the risk of damaging brand reputation for these suppliers.
“This work is important in quantifying the situation and gives producers, exporters and retailers market mechanisms and technologies to detect and mitigate fraudulent activity.
“Farmers can’t combat this issue alone; a coordinated supply chain approach is needed if we are to overcome the billion-dollar problem and stamp out fraudulent practices,” Ms Townsend said.
Deakin University’s Professor Rebecca Lester, director of the centre for regional and rural futures (CeRRF) said in a statement that many producers were unaware of what food fraud risk existed once products were dispatched from the farm or boat. This was despite the fact that they were undeniably being financially affected.
“Industry must arm itself with better information about what to look for and strategies to respond if confronted by fraudulent activity. Getting on top of the problem could save the sector up to $3 billion annually,” Lester said.
Lester also noted that while guaranteeing the origin of a product was costly, it was an effective way of preventing the problem rather than solving it.
“Fortunately technology has come a long way and avenues now exist to guarantee product authenticity through analytical testing of the product itself.
“Technologies such as next-generation DNA sequencing, DNA chips and lab-on-a-chip technology offer great potential for effective, low-cost and rapid onsite solutions for a broad range of authenticity testing of products,” she said.