January marked the anniversary of the horsemeat scandal. In the last edition of our newsletter we updated you on the faltering progress of the various investigations into the scandal. Since then, December has seen the much anticipated publication of the interim report of the Elliott Review into the Integrity and Assurance of Food Supply Networks, commissioned by Defra. This review does not deal specifically with the circumstances of the horsemeat scandal, but considers food supply networks more generally, including issues which affect consumer confidence in the authenticity of food products and any systematic failures which have an impact on food safety and public health.
Professor Elliott’s final report is due to be published in Spring 2014, but the interim report gives a strong indication as to what the findings of the final report are likely to be, which gives businesses some opportunity to prepare.
Although the report finds that UK customers have access to some of the safest food in the world, it targets the fact that there is often a focus on food hygiene rather than food standards. This is supported by the Food Standard Agency’s Annual report on UK local authority food law enforcement from 1 April 2012 to 31 March 2013, which identifies a 16.8% decrease in the number of food standards interventions as compared to the previous year.
The interim report identifies a worrying lack of knowledge regarding the extent to which criminal activity has infiltrated the food industry, such that it is not possible to determine whether food crime is limited to groups and individuals who operate exclusively within the food chain, or whether organised criminal networks have branched out into the food industry.
The report makes some 48 recommendations. One of the issues which has attracted the most interest in the press is the proposed creation of a specialist food crime unit to target criminal activity in the food chain. This particular proposal is unlikely to be a cause for concern to businesses operating in the hospitality and leisure sector. However, if followed through in the final report, some of Professor Elliot’s further proposals could have a significant impact. In particular, the report recommends that shareholders, board members, owners and those managing food businesses should ask, and be obliged to consider searching questions about whether certain deals are too good to be true. The underlying point is whether some businesses operating in the food industry should consider whether they may be focusing on price to the exclusion of other factors.
Significantly, if a business operating in the food industry suspects suspicious activity, turning a blind eye puts the business at risk of being accused of complicity. The report gives the example that where a retailer pays what it knows is well below the market price for foodstuffs, it should be expected to be able to provide evidence that it has carried out checks to ensure that there is no reason to suspect the foodstuffs may be counterfeit or adulterated. Without this evidence, the report considers it would be reasonable to infer that the most obvious way the supplier was meeting the price was by some form of illegal activity. The report gives a case study of a request to supplier for a 4oz “gourmet” burger at a unit price of less than 30p. The supplier believed that using the cheapest beef available, and factoring in fixed costs, the cheapest possible unit price would be 59p and that to achieve the lower price it would be necessary to use beef supplied from non EU-approved premises and to include offal and mechanically separated meat.
Professor Elliot identifies the first part of risk management is knowing who you are doing business with. This means understanding the supply chain and how it works on a practical level. Tellingly, the report states that “when things go wrong, waving a piece of paper will not provide a defence against allegations of negligence or handling counterfeit goods (which constitute criminal property under the Proceeds of Crime Act 2002)”.
The report demands a zero tolerance approach to food crime, and this includes an active acceptance of responsibility across all stages of the food chain. If the recommendations in the report are carried through, this means that more will be expected of food businesses in terms of demonstrating that they properly understand where their food has come from and what it contains. However, whilst the report acknowledges the need for better auditing processes, methodology and training, and shared intelligence, our concern remains the lack of specialist resources at regulator level, as well as the on-going lack of a co-ordinated leadership approach by the FSA, Defra and the Department of Health. In our view, this is what needs to be tackled first.
While the slow pace of the horsemeat investigations would suggest that any significant changes are likely to be some time away, the message is that food businesses in the hospitality and leisure sector should review their relationships with suppliers to establish whether there are any issues with the supply chain, and keep in mind that if something seems too good to be true, it probably is!
The findings of the interim report, while certainly useful, demonstrate that there is still a long way to go before the full consequences of the horsemeat scandal are understood, and so one year on, we may not still be at the starting gate, but we certainly haven’t reached the homestretch.