Food fraud. Not something you really want to hear about given our love affair with food. But given that the landscape of food is changing so dramatically due to extraordinary gains in technology and our access to foods from around the globe, it's a subject worth addressing.
New research published in the April Journal of Food Science is apparently the first analysis of "food fraud" or as it is called in the scientific literature, "economically motivated adulteration in food."
Having worked as a financial analyst that covered the food industry among others, I am all too aware of this economic motivation, the need to meet quarterly earnings and the desire to drive shareholder returns. As a matter of fact, that economic incentive is at the heart of our current capitalist model, and is given the regal-sounding name of "fiduciary duty." In other words, it is what executives in the food industry are paid to do: reduce costs of production by replacing natural ingredients with their cheaper, synthetic alternatives in order to increase profit margins.
According to the study, "the authors found 95 percent of records involved replacement -- an authentic material replaced partially or completely by another, less expensive substitute."
So where is this happening? It turn out that based on a review of records from scholarly journals, the top seven adulterated ingredients in the database are:
- Olive oil
- Orange juice
- Apple juice
But if we were to take the literal definition of food fraud, which as defined in a report commissioned by the Department of Homeland Security and funded by the National Center for Food Protection and Defense (University of Minnesota) as:
"A collective term that encompasses the deliberate substitution, addition, tampering or misrepresentation of food, food ingredients or food packaging, or false or misleading statements made about a product for economic gain."
Wouldn't that also include our corn and soy that have been engineered to contain patented, distinctly characterized traits that enable the crops to either synthesize and create their own insecticides or to withstand increasing saturation by other chemicals like weed killers?
So should genetically engineered ingredients be #8 on the list?
If the lawsuit against Frito-Lay for the labeling of their corn products as "natural" despite the fact they contain these patented, genetically engineered ingredients, and a similar suit against ConAgra for doing the same with their cooking oils are a leading indicator, it is certainly food for thought.
And if the beef industry can serve as an example, with a beef processing company filing for bankruptcy (perhaps to avoid shareholder litigation or any false and misleading claims filed by consumers) as consumers opt out of "pink slime" and the USDA calls for its labeling, shareholders might want to start asking some tough questions.
A food awakening is happening in the United States, fueled in part by the escalating rates of diseases and in part by the social media. And with genetically engineered ingredients labeled in over 40 countries around the world (as seen in the image below) and patented by the United States Patent and Trademark Office for their distinctly different characteristics, it just might be a smart move for investors interested in both the health of their families and the health of their portfolios to be mindful of the continued adulteration of our food supply.
To learn more about the economically motivated adulteration of food, please visit the database www.foodfraud.org