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Monday, 18 February 2013

Where does the food come from?

The row over the horse meat in products labelled 'beef' is probably the tip of a very large iceberg, the main problem for most retailers affected being the issue of 'mislabelling.' Nor is it only beef products that are affected, many 'Halaal' products have showed traces of pig DNA, which is most definitely NOT Halaal and never can be. The investigation in the UK and here in Germany is turning up a very convoluted supply chain, and when one looks at it, the surprise should really be why it has taken this long to surface.

Looking at the supply of meat for one of Germany's biggest food chains who have withdrawn a number of their 'Own Brand' products found to have horse meat and not beef in them, it shows up a trail of second, third and fourth party involvement in the supply. The contract for the frozen meals went to a company based in Luxembourg, who ordered the meat from a company in the Netherlands, they placed an order for the meat with a French supplier, who passed an order to a supplier in Cyprus, who placed the order with a Romanian abattoir. The whole being a part of a 'tendering' process engaged in my each part of the chain. As each of the companies involved is within the EU they are, of course, bound by EU regulations which means everything should be documented in accordance with EU Law and it appears that, after a fashion, it was.

The problem, of course, is that once you've reduced a cow or a horse to a carcass stripped of skin, head, hooves and onternal organs, it is very difficult to tell them apart. Add the 'industrialisation' of the process and there are probably very few people on the recieving end who would know anyway. Meat is meat, if the waybill says it's beef, they would accept it as stated. There are, of course, several questions raised by that, but let's start with the supply.

Did whoever supplied this in Romania deliberately 'make up' a shortage of beef with surplus horse flesh? If so that is fraud and needs to be addressed by the relevant police forces. However, a defence would be if it could be shown that in the transmission of the original order, the Dutch for 'beef' became the French 'Boeuf' or something else, and when that, in turn reached Cyprus, was it correctly translated into the Greek equivalent and from there into the Romanian term. If, at some point it simply became 'red meat,' then the supply of horse instead of bovine is not fraud in Romania, but becomes fraud when the intermediate 'suppliers' submit an invoice for 'le Boeuf.'

I suspect this is a problem with all foods sourced in this way. In every case where a translation of the original is required you are likely to run into subtle, and sometimes not so subtle, changes of meaning and understanding. The more languages involved, the worse it will get.

Now the important question is, of course, how does the situation arise in which a country like Germany, with a large agricultural sector, is sourcing meat through the Netherlands, France, Cyprus and Romania? It isn't as if the Germans don't have a meat producing industry of their own. The same applies to Britain. So what is at work here? The simple answer is what economists and accountants like to call 'market forces.' All of these 'suppliers' are part of a chain of people invited to tender to supply a wide range of products which someone else will process and sell under a 'barnd' or 'name' their domestic customer know and recognise. The reason for sourcing materials in this way is equally simple. The accountants in the primary contractor want a 'quality' product at the lowest price so as to maximise the profit. In the bulk food retail industry the 'mark-up' is actually pretty small per item, but large in the greater picture of overall 'turnover.'

So, if the contractor producing the item has to keep his price low, he, in turn, has to find a supply of the raw material which is cheap enough to allow him to make a small profit and so on down the chain. French, German and British beef is not cheap. Among other reasons it isn't is the 'Minimum Wage' and high costs of land, power and feed. Countries like Cyprus and Romania can undercut the domestic suppliers by quite a margin. Add to this the low incomes in most countries of the former Eastern Bloc and one soon realises that, to the majority of their populations, meat is meat. Horse, cow, lamb or pig is all the same - they will buy whatever is available at a price they can afford. It should therefore be no surprise to find that an order for 'red meat' includes a bit of a mixture.

Who should we blame? The manufacturer, the supplier or the seller? If we have to blame anyone we should blame ourselves and the accountants. We are responsible in part because we demand 'cheap' food and varieties of food we can't produce domestically at the sort of prices we are prepared to pay. We should blame the accountants for their acceptance of tenders at prices they must know are barely profitable - after all they are accountants and know the price of everything (whether they understand the value of anything is another question) and can therefore see when a price is cutting things so fine there has to be a suspicious supply chain.

One could also ask why the Dutch comany (or any other) doesn't source the product they want directly from the end source? Again, they must know where the meat ultimately comes from - especially in the quantities involved here. As I said at the outset, there are quite a few questions here for everyone and before we start 'blaming' the supplier, the manufacturer or anyone else, we really do need to look at our own expectations. Is it really realistic to expect the range of things we do, at the prices we pay, 24/7/365? Probably not, but as long as we do, we also need to think carefully about where it all comes from - and our 'regulators' certainly need to look at the conytrols they are supposed to have in place and which have failed so spectacularly here.

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