Economic Columnist - Edwin Laurent CMG OBE

Economic Columnist – Edwin Laurent CMG OBE

The recent discovery of horsemeat parading as beef in mince, ready meals and other foods is too widespread and the amounts found too high, in some cases 100%, to be due to accident or negligence.

The scandal involving big names including Nestlé, Tesco and Asda, will have far reaching implications, not just for consumers but all the way along the food supply chain.

As scams go this one, at least on the surface, is arguably not such a big deal; so far there is no indication of the products being unsafe or unfit for human consumption.

This is mild when compared with notorious scams like the addition in 2008 in China of the chemical melamine to baby formula to make it appear to have a higher protein content. There were then over 300,000 victims; 860 babies were hospitalised and six died.

Criminal prosecutions followed, two people were executed, a third given a suspended death penalty, three life imprisonment and two received 15-year jail terms. Seven local government officials were fired or forced to resign. The scandal greatly damaged the reputation of China’s food exports.

Sick Chinese babies.

Sick Chinese babies. Photo courtesy news.bbc.co.uk

Schemers though tend not to be swayed by ethical considerations as they seek a quick profit. Just four years before China had undergone an even worse scam involving watered down baby milk and formula of minimal food value, then many more infants died that time of malnutrition. Exemplary justice had been meted out then but the lure of easy profit at the expense of a trusting and unsuspecting public was too enticing to dissuade the unscrupulous.

Consumers of course feel let down and cheated by having horsemeat passed off as beef in mince and processed food. Even though this scandal in the UK and in Europe is not of comparable magnitude to these criminal acts in China, it raises serious systemic concerns.

Horsemeat scandal

Happy horse. Photo courtesy fhm.com

The functioning of our contemporary but highly complex food production and delivery systems are founded on trust. At one end we hand over our money to the supermarket or the shop or restaurant in exchange for the food products that we want.

We do this even if we might not be able to prove that the goods are what the seller claims them to be, that they are free of contamination and are of the quality that we think them to be and for which we are paying.

We go by the label; in essence we trust the seller and the control and regulatory system. The retailer would have purchased from another supplier or processor also exercising a certain degree of trust since every batch in a transaction cannot be tested to prove that it is exactly what the seller claims it to be. This trust would have been applied at each stage of the supply chain, stretching all the way back to its source, the farmer.

Now that trust, on which the supply system depends, has been severely undermined by the recognition that the regulatory and control mechanism has been blind to and has not prevented unscrupulous and dishonest processors and distributors from selling us food that is different from and maybe inferior to what we pay for.

Horsemeat

Can you tell the difference? Photo products uk.news.yahoo.com

The World Health Organisation branded the 2008 milk contamination case in China as “clearly not an isolated accident, [but] a large-scale intentional activity to deceive consumers for simple, basic, short-term profits.” Maybe this same description applies to what has been happening in the UK and Europe.

The requirement for testing the presence of foreign DNA in a particular product is not routine and only conducted for a specific animal type, when there is specific ground for suspicion. So chicken, pork lamb, kangaroo and who knows what else could be ending up where it should not.

Traces of pork were recently discovered in Halal certified meals provided to some prisons. Just consider the distress of devout Muslims who have found out that they could unwittingly have been eating pork.

What worries many consumers is that if these abuses can occur and were not prevented or immediately detected by the checks in the regulatory system, then how long might they have actually been going on for? And even worse, what other unreported abuses have taken place? What else might have been in our food? Have adequate sanitation standards been observed etc?

Godfather horsemeat

Photo courtesy uk.news.yahoo.com

These are not unreasonable fears. We can expect that, given the opportunity, there will always be some unscrupulous supplier prepared to place profit ahead of the welfare of the consumer, but the regulatory system that we have relied on to prevent this happening has failed.  Therefore what if any assurances or security are we left with?

A fully understandable and justified wave of public indignation is sweeping the UK and Europe. Quite rightly this will push politicians to act and their most likely response will be tougher regulation and control.

But this might not be as helpful as one might think. Under current arrangements, products move freely between the rest of Europe and the UK. Therefore, even if sanitary and phytosanitary checks are made more stringent there can be no routine scrutiny on imports from the EU.

This arrangement is a fundamental tenet of the EU Single Market and won’t change. So how can the authorities show that they are doing something? The danger is that their knee-jerk response could be to apply greater zeal in the regulation and inspection of those food products that can be checked; i.e. those from outside the EU. Of course the problem is internal to the UK and the EU, but that ‘inconvenient detail’ might well be overlooked.

Additional scrutiny and delay could prove more than a mere irritant though to food exporters from the Caribbean and Africa who do not possess sophisticated domestic testing and certification capabilities.

Consequently, unlike their counterparts in the US or Australia they will invariably be more heavily reliant on the checking by the EU inspectors. Exporters of beef, fish, vegetables and processed foods, already having to cope with the onerous Global G.A.P. regime can find that they too pay for an abuse to which they are not party.

Similarly Caribbean consumers are also at risk, lacking even the safeguards enjoyed by Europeans. In 2011, the ACP Caribbean imported 776 million euro of food and agricultural products from the EU but does not have the sophisticated capability for DNA testing of meat and meat products, it is obliged to rely on the certification of the EU authorities. But what happens if the certificates can no longer be trusted?

The unfortunate consequence of the ‘horsemeat’ scam is that its main victims will be those least able to protect themselves. In the UK and Europe these are families on tight budgets who can only afford the cheapest food; in the Caribbean, consumers who have no means of determining whether the imported meat products are what they purport to be and secondly the region’s food exporters who might well face additional and unjustified hurdles exporting to Europe.