Some retail buyers ‘want to be screwed’

February 22, 2013, 7:40 am

The horsemeat scandal in Europe poses questions on supply chain for all food companies, seafood included.

The long supply chain, which led to horsemeat finding its way into lasagne products sold under the Findus brand, has been blamed for the situation.

However, sources told Undercurrent News some retail buyers, who one source said often “want to be screwed”, use such supply chains as a way to build up a distance from what is actually going on.

Findus had outsourced processing to French manufacturer Comigel, which bought the horse-masquerading-as-beef from Spanghero, another French processor owned by Lur Berri, which is also majority owner of the high-end seafood producers Labeyrie Fine Foods. The meat was, in turn, supplied to Spanghero by a Romanian firm.

Sources told Undercurrent “traceability” in the supply chain, often bandied around by ethical and unscrupulous suppliers alike, can be engineered and isn't entirely the point here.

“Traceability is about more than a few bits of paper, it’s about really knowing your supply chain and your suppliers,” said an executive supplying frozen seafood from Asia into UK retail.

Some retail buyers “want to be screwed”, another source with a retail supplier said, referring to the trend for buyers to go for the lowest bidder and turn a blind eye, as long as things look ok on paper.

“They can go to their boss and say ‘look at the money I saved you’. Then they point to the bits of paper that show the ‘traceability’ is all in place.”

If it goes wrong, the supplier is blamed.

Several sources have, maybe hopefully, suggested the scandal presents an opening for seafood, as those that are supposedly repulsed by eating horsemeat switch to other proteins.

The validity of this can be debated, for the very same reasons the scandal came about -- the desire for cheap food and the forgiving nature and short memory of consumers. This will not change.

Those that switch from meat as a result of the scandal will, more than likely, just switch back, a retail source told Undercurrent.

Consumers are very “forgiving”, said the second seafood retail supplier source, which is what allows such supply chain abuses to take place.

“Consumers didn’t complain about eating the horsemeat, they clearly liked it,” the source told Undercurrent. 

When there was a food scandal on pork and chicken last year, as a result of contained feed, “we got very excited”, he said. “We had big volumes of pangasius ready. But demand never came.”

In the same way, a consumer will be pleased if he gets 24 smaller shrimp in a 250-gram retail pack, instead of 20 larger shrimp, he said.

Even if the consumer notices, which is not often the case, “they will be pleased, because they got more shrimp. It doesn’t matter that the smaller shrimp cost less and that he has, basically, been conned”.

It is these little tweaks and tricks in the food supply chain where companies make margins on big contracts.

When contracts are put out to tender, suppliers bid on price and then work back from this, the source said.

“If you have the contract and you have the volume, then you can work out how to make your margin,” he said.

“When we lose a contract, we always wait a month or so. Then, we test the product from the supplier who replaced us and we often find something out with the specification. If it looks too good to be true, it probably is. Miracles don’t exist.”

Companies that just "buy on the market", instead of forming close relationships with suppliers are fair game for unscrupulous suppliers. Some of them couldn't care less anyway, as long as the product is cheap and comes with the right paperwork, the source supplying frozen seafood from Asia into Europe told Undercurrent.

“It’s not just about BRC, MSC or ASC, these things mean very little in Asia,” said the executive, referring to where he sources. “It goes much deeper than the paper trail.”

It seems more DNA testing could be a likely result of the horsemeat scandal.

"I think it [the fallout from the scandal] will lead to more rigour throughout the supply chain which inevitably means more testing -- if you run your business properly, you should have nothing to hide," the UK executive seeing a boost in seafood sales told Undercurrent.

However, DNA testing needs to improve, as is shown by the scandal around the mislabelling of non-Marine Stewardship Council (MSC)-certified seafood as MSC-certified, by plants in China.

This is one of the open secrets in the seafood business. Because the fish is the same species, it is very hard to tell from DNA testing if cheating is going on.

When Undercurrent ran this story in October, the MSC said it would share the results of an investigation. The group did not return request for comment on this in time for publishing.

Here is a situation where chain of custody should be in place, but misdeeds still take happen. Where there is a margin, there is a way.

The Chinese plants are not the only companies to blame here; suppliers turning a blind eye, to meet contracts from retailers looking the other way, are just as guilty.

The horsemeat crisis -- and food fraud in general -- is more about a lack of honesty and basic greed than traceability, sources told Undercurrent.

Cruelly, one of the companies in seafood most well-regarded for its integrity, Young's Seafood, has been drawn into the debate, by being a sister company of Findus.

Young’s assured Undercurrent it operates a much tighter supply chain than its sister company, which uses outside processors.

Young’s has made a big play of identifying what is informally known as the “seven sins of fish sourcing”.

Ironically, one of these, substitution, was what caught out Findus.

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