Inside the Secret World of Global Food Snoops

A bowl of ice cream on a hot day in Shanghai gave American Mitchell Weinberg the most difficult bout of food poisoning he can recollect. It also inspired the then-trade consultant to set up Inscatech — a global network of food spies.

In demand by multinational retailers and food producers, Inscatech and its agents scour furnish chains around the world hunting for evidence of food industry fraud and malpractice. In the eight years since he founded the New York-based firm, Weinberg, 52, says China continues to be a key growth region for fraudsters as well as those developing technologies trying to counter them.

” Statistically we’re uncovering hoax about 70 percent of the time, but in China it’s very close to 100 percent ,” he said.” It’s pervasive, it’s across food groups, and it’s anything you can possibly imagine .”

Police inspect illegal cook oil, or “gutter oil, ” seized during a crackdown in Beijing in Aug. 2010.

Photographer: AFP via Getty Images

While adulteration has been a bugbear of consumers since prehistoric wine was first diluted with saltwater, scandals in China over the past decade — from melamine-laced baby formula, to rat-meat dressed as lamb — have seen the planet’s largest food-producing and eating nation become a hotbed of perverted, forgery, and polluted food.

Weinberg’s company is developing molecular markers and genetic fingerprints to assistance authenticate natural products and sort genuine foodstuffs from the fakes. An alternative approach companies are pursuing employs digital technology to track and record the provenance of food from farm to plate.

” Consumers want to know where products are from ,” said Shaun Rein, managing director of China Market Research Group, quoting surveys the Shanghai-based consultancy conducted with consumers and supermarket operators.

‘Business Opportunity’

Services that help companies mitigate the reputational hazard that food-fraud poses is a” big growth area ,” according to Rein.” It’s a great business opportunity ,” he said.” It’s going to be important not just as a China play, but as a global play, because Chinese food companies are becoming part of the whole global supplying chain .”

Some of the biggest food companies are backing technology that grew out of the anarchic world of crypto-currencies. It’s called blockchain, basically a shared, cryptographically secure ledger of transactions.

Wal-Mart Stores Inc ., the world’s largest retailer, was one of the first to get on board, simply completing a trial use blockchain technology to track pork in China, where it has more than 400 stores. The period taken to way the meat’s supply chain was cut from 26 hours to only seconds use blockchain, and the scope of the project is being widened to other products, said Frank Yiannas, Wal-Mart’s vice president for food safety, in an interview Thursday.

Shanghai-based Zhong An Information and Technology Service Co. said in June it will use the technology to track chickens from the coop to the processing facility and on to the market or store.

Blockchain Pilot

Alibaba Group Holding Ltd ., too, watches the potential for the eight-year-old technology to provide greater product integrity across its platforms, which accounted for more then 75 percent of China’s online retail sales in 2015. The planned blockchain project will involve the Chinese e-commerce behemoth working with food suppliers in Australia and New Zealand, as well as Australia Post and auditors PricewaterhouseCoopers LLP.

” Food hoax is a serious global issue ,” said Maggie Zhou, managing director for Alibaba in Australia and New Zealand.” This project is the first step in creating a globally respected framework that protects the reputation of food merchants and gives consumers further confidence to buy food online .”

Fraud expenses the global food industry as much as $40 billion annually, according to John Spink, director of Michigan State University’s Food Fraud Initiative. In China, where the 2008 melamine milk crisis resulted in the death of at the least six newborns, it’s a hot-button issue compounded by the country’s growing appetite for higher quality food and swelling middle class. A Pew Research Center analyse last year found 40 percentage of Chinese position food security as a “very big problem,” up from 12 percentage in 2008.

Global Concern

” This is not a Chinese issue — it’s a global issue ,” said Yongguan Zhu, director general of the Institute of Urban Environment, part of the state-funded Chinese Academy of Sciences.” What we have to do is reinforce our regulations to improve the transparency of the administration, for example information-sharing .”

Farmers pour away unsold milk in Hebei Province in Sept. 2008.

Photographer: China Photos/ Getty Images

Zhu says blockchain could play an important role in improving traceability. Its database of records can be built like a chain and can’t be broken or re-ordered without disrupting the entire connection.

China strengthened its food security statute in 2015 in response to the spate of scandals. Counterfeiters and food tamperers face tougher penalties, including jail time in some cases, and more than $800 million has been expended hiring more food security personnel and bolstering monitoring facilities, according to an April report from the Paulson Institute, a Washington-based think tank. Last month, Beijing underlined to authorities the need to be upfront in disclosing food safety issues.

” Food-fraud will always exist ,” said Yongning Wu, chief scientist at the government-run China National Center For Food Safety Risk Assessment. While authorities in China have joined the global fight against the scourge, Wu doesn’t see the problem disappearing.

” We can only develop technology to see it ,” he said.” However, fake-food producers will always update their technology to dodge inspections .”

Wily Scammers

The wiliness of fraudsters is what stimulates Inscatech’s Weinberg less hopeful about blockchain. His firm mainly uses informants on the ground to sniff out where in the production process food-fraud is taking place, and most of his work in China is with western companies that manufacture or source product there.

Counterfeit liquor is tested at the Beijing administration for industry and commerce center in June 2007.

Photographer: Teh Eng Koon/ AFP via Getty Images

” The problem is the data is merely as reliable as the person providing the data ,” said Weinberg, who remembers considering everything in China from synthetic eggs to fake shrimp that still sizzle in a wok.” In most supplying chains there is one or more’ unreliable’ data provider. This entails blockchain is likely useless for protecting against food-fraud unless every piece of data is scrutinized to be accurate .”

A months-long Bloomberg investigation into the global shrimp trade last year showed how unreliable documentation had fanned an illegal transhipping strategy involving Chinese aquaculture exporters.

But blockchain is “light years” away from information systems used by the global food industry today, which relies heavily on paper records, said Yiannas, Wal-Mart’s food safety chief. By recording the identity of those who input data into the chain, the technology removes the anonymity that has helped food-fraud to thrive, he said.

The role of humans in recording the supplying chain will also diminish, said Yiannas.” More and more of these documents will eventually be captured in an automated style .”

China’s Food and Drug Administration didn’t immediately respond to an email requesting comment on the country’s food security efforts.

Some companies are already bringing traceability to consumers. Fonterra Cooperative Group Ltd ., the world’s biggest dairy exporter, started putting QR codes on cans of newborn formula in April, enabling buyers to verify the product’s authenticity.

Criminal Factor

The challenges for China –” the factory of the world” — are especially vast because of its sizing, population, multilayered administrative divisions, and” the willingness of criminals to exploit every corner that they can in order to make money ,” said Michael Ellis, who ran Interpol’s trafficking in illicit goods division until October.

At Interpol, Ellis, a former detective with Scotland Yard in London, was involved in” Opson ,” an operation that led to the seizure of more than 10,000 tons and 1 million liters( 264,000 gallons) of hazardous fake-food and drinks across more than 50 countries.

Without a presence to fighting it, food-fraud globally” will explode ,” Ellis said.” It will simply continue to grow, and who knows where it will result .”

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