A Short Story About The Long History Of Agricultural Fraud & How To Spot It

Agricultural fraud has as long a history as agriculture itself. There’s a reason France has laws governing what goes into their baguettes.

Over the centuries this has shaped agricultural policy and rules around the globe. For example, EU regulations define agri-food fraud in four ways:

• Violation of regulations: Any act that goes against agri-food chain regulations.

• Deception of customers: Anything that hides the true quality or nature of the product.

• Undue advantage: The perpetrator is set to benefit either directly or indirectly from the fraudulent act.

• Intention: Proof of intention to commit said fraud.

As with any commodity, if there’s a way to make a fast buck from it, then the unscrupulous that walk amongst us will surely snatch up that opportunity.

Fraudsters spot their opportunity at any stage of the game and deceive by lying about the provenance, quality, or quantity of the product they are selling.

This also extends to the adulteration of produce being sold either by ‘watering down’ the good stuff with substandard produce or creating products with poor quality produce and mislabeling to command higher prices.

While it’s big business for the fraudsters, it costs the global food industry around $40 billion annually. This adversely affects farmers' livelihoods and in cases of exceptionally large fraud, it can affect a country’s economic stability.

The terrible effects of agri-fraud aren’t just restricted to the economic kind as they can harm the reputation of producers and whole agricultural sectors, wreak havoc on the environment due to unsustainable farming practices, and even more shockingly, it can pose a real risk to public health.

Bread 

Photo by Wesual Click on Unsplash

In times of chaos and war, there are always those who prey on the desperate, and bread, quite often a mainstay of the poor, is quite an easy target.

While those ensconced in the Palace of Versailles ate white bread and more than likely the ‘cake’ that Marie Antoinette probably didn’t mention, the poor were left with meager amounts of bread adulterated with special ingredients, including sawdust.

This practice continued long after royal heads were lost and Napoleon was exiled. Reports from 1898 speak of an unscrupulous gentleman who, in a shady deal with millers, sold flour to bakers in France that had been mixed with sawdust.

Britain introduced food adulteration laws in this period to counteract fraudulent and dangerous practices.

Wine 

Rudy Kurniawan’s counterfeit wine before destruction - https://creativecommons.org/licenses/by/4.0/deed.en

Rudy Kurniawan committed some of the biggest wine fraud the world has ever seen.

While living illegally in the United States, Kurniawan made a name for himself in the industry by buying and selling extremely expensive rare wines.

Except he wasn’t selling rare vintages at all, he was actually creating counterfeit bottles with less salubrious wines and passing them off as real for extremely large profits. He was said to have sold around $28 million of counterfeit wine over his ‘career.’

After arousing suspicions, the FBI raided his home and found all of the counterfeit evidence they needed. He was prosecuted and found guilty in 2013, and served 10 years in US prison before being deported.

Salad oil 

Anthony ‘Tino’ De Angelis committed agricultural fraud on such a scale that its effects were felt by Wall Street, not to mention the banks’ and investors’ eyes that he pulled the proverbial wool over.

Having risen to become a commodity trader by the 1950s after a checkered career of various successes and failures, he moved into the world of soybeans and their oil.

He bought a petroleum tank farm in New Jersey and converted its 150 tanks into a soybean oil refinery. He fraudulently filled these tanks with water and layered them with a few inches of oil to create the illusion that he was sitting on more oil than he had.

For years he managed to fool inspectors to his refinery using his deceptive methods and used his inflated, and now verified, oil figures to secure sizable loans.

His scheme was finally exposed in 1963 when the bottom fell out of the soybean oil market and De Angelis investors began to panic. However, the investors had bank-backed receipts and everything should have been ok. But it wasn’t, because this is when inspectors looked deeper into those tanks and discovered that the oil simply didn’t exist.

Companies and banks caught up in the scheme included American Express, Bank of America, and Procter and Gamble. De Angelis's company committed fraud to the tune of what would be $1.2 billion in today’s money.

De Angelis served seven years in prison only to be released to commit even more fraud.

M.G. Crisci chronicled the crime drama in 2016.

How to spot it in the wild

• Know your product: By understanding the product inside and out you will be able to spot any inconsistencies. You should know of its growing seasons and where it is traditionally grown.

Understanding other details such as farming practices and the different varieties will also help you spot any details that may seem off.

• Know your labels: By combining the above knowledge with the knowledge of what to expect on labels, you can again spot any inconsistencies almost instantly.

Other things to look for on labels are certification and quality standard seals of approval.

• Tracing the producer’s history: Knowing the provenance of agricultural products and their supply chain history is vital to preventing fraud and providing transparency to the consumer.

Blockchain technology is a tool that can be used to track and store every step and transaction in the produce’s history from farm to fork.

• Testing and verification: Consumers, investors, and governing bodies can utilize the results of testing by accredited laboratories to identify any fraudulent activities.

Independent or accredited testing will show any adulteration, contaminations, and quality levels of agricultural products ensuring that any traded meets set standards.

Be vigilant

As a buyer or investor in the agricultural industry, you need to be vigilant against fraud.

And as technology, surveillance, and inspection technologies become more advanced, so do the fraudsters. 

But by checking and double-checking various verification processes you can make yourself very unlikely to become a victim and a footnote in the long history of agricultural fraud.