Written by 2:57 am European Union

A sense of ginger fraud: prevalence and deconstruction of the China-European union supply chain

The complexity and transparency of a supply chain or indeed a network is an important characteristic that helps to determine where fraud risks exist. Therefore, it is pivotal to map and deconstruct the Chinese and the EU ginger market and to identify critical nodes along the chain.

The information about the ginger markets in China and the EU was obtained from the Food and Agriculture Organization Corporate Statistical Database (FAOSTAT) as well as Tridge. The basic scheme of the ginger supply network from China to the EU was generated from 13 articles including five government reports (Supplementary Table 1) related to ginger or spice supply chains. The information acquired from interviews, including the role of the companies, their upper and lower actor groups, their knowledge of the ginger supply network and fraud issues, was used to validate the information obtained from the 13 articles and the supply chain actor groups. The actor groups in the supply chain were connected according to the flow of products from one actor group to the next. In addition, the supply chain was divided into different stages to reduce the complexity of the whole network based on the classification method of the “Guidance on authenticity of herbs and apices industry best practice on assessing and protecting culinary fries herbs and spices” released by British Retail Consortium, Food and Drink Federation and Seasoning and Spice Association36. The associated fraud issues at each stage of the supply chain were also identified based on this Guidance.

The ginger market in China and the EU

Export market: China

The demand for ginger is growing annually and is expected to increase in the coming years16. In 2019, exported ginger (uncrushed or unground) amounted to US$ 849.5 million, and the total export of crushed or ground ginger was US$ 81.5 million16. Based on the export value, the top five exporting countries of ginger are China, the Netherlands, Thailand, Peru, and India. China is the main producing and exporting country of ginger and has more than a 50% share of the global export market. China’s ginger exports in 2019 amounted to US$ 508.3 million, with an export volume of 490,500 tones37. Moreover, almost 80% of all suppliers from developing countries to the EU are Chinese suppliers. Among all ginger products exported from China, almost 90% are in uncrushed/unground (whole) forms, while only 10% are crushed or ground products16. Ginger production in China has been mechanized, which makes it more competitive than any suppliers. Some provinces in China, such as Shandong, Hebei, Liaoning and Fujian, are known as the main origins of ginger16.

Import market: the EU

In 2018, the import value of ginger worldwide amounted to US$ 826.4 million, with an import volume of 645,700 tonnes37. For the EU, most of the ginger is imported from other countries, especially developing countries. In 2018, more than 70% of imported ginger in the EU came from developing countries16. The Netherlands is the largest importer and marketer of ginger in the EU, where the import volume of ginger has grown significantly16. Germany is the second largest importer of ginger in the EU, with an import volume of 22,600 tonnes in 2018. Nearly 90% of Germany’s ginger product imports come from developing countries38. Italy, Spain and France are medium-sized importers of ginger in the EU and their main supplier is China16.

The ginger supply chain from China to the EU

The ginger supply network between China and the EU follows a traditional system. The key actor groups in the ginger supply network are presented in Fig. 1. They are farmers, collectors, processors, agents, exporters, wholesalers, retailers, food manufacturers, food service operators, business-to-business (B-to-B) companies, seasoning companies, packaging companies and consumers. From farmers in China to the final consumers in the EU, the ginger supply network can be divided into nine stages according to the classification method of the Guidance on Authenticity of Herbs and Spices36. The nine stages are primary production, local collection, local processing, local market, local consumer, international trade, EU processing, EU market and EU consumer. The structure and the food fraud vulnerability of the supply chain were analysed by the stages to gain a better understanding of the supply chain from a fraudulent perspective.

Fig. 1: The ginger supply chain from China to the European Union (EU).
figure 1

Note. Each solid small rectangle represents an actor group, each dotted big rectangle represents a stage (from Stage I to Stage IX), and the arrow direction represents the flow of products from one actor group to the next.

A modification of the SSAFE FFVA tool was applied to assess the fraud vulnerability of each stage and the whole chain with indicators from the tool. The tool was developed as a self-assessment tool for food business operators. However, in the current study the tool was modified to allow a ‘bird’s eye view’ evaluation, i.e. as a third-party tool instead of a tool for a food business operator. The modification of the tool was based on the acquired information from the literature, the databases, and the interviews with stakeholders. The available information from the previous sections includes specific products, detailed fraud issues, potential adulterants, available techniques, the number of historical cases, etc. Therefore, only indicators related to the above-mentioned information were used in this study. Some food fraud factor/indicators of the SSAFE self-assessment FFVA tool focus on the company-specific food business environment. However, these factor/indicators cannot be used at the aggregated level for the ‘bird’s eye’ approach and were omitted in the current study. These inapplicable factor/indicators are listed in Supplementary Table 6. It is important to note that the indicators from the Control measures were all excluded from the assessment as the indicators belonged to the list of inapplicable indicators. The applicable fraud factor/indicators were related to potential threats, represented by food fraud factor/indicators in the Opportunities and Motivations key element groups; therefore, the fraud vulnerability of the ginger supply chain was discussed from two perspectives, opportunities related vulnerability and motivations related vulnerability. The applicable fraud factor/indicators were further divided into the factor/indicators for each stage and the factor/indicators for the whole chain based on the targeting objects of the fraud factor/indicator questions (Table 6 and Table 7). The factor/indicators applied to each stage all belonged to the key element Opportunities including technical opportunities and opportunities in time and space. Whereas the factor/indicators applied to the whole supply chain were from the key elements Opportunities and Motivations. The consequence of the selected ‘bird’s eye approach’ is that the level of vulnerability is determined by the threats in the chain only. In practice these can be mitigated, at least to some extent, by appropriate control measures but this will depend on priorities and capabilities of individual food business operators.

Table 6 The fraud factor/indicators targeted on each stage of the supply chain.
Table 7 The fraud factor/indicators targeted on the whole supply chain.

The assessment of the opportunities-related vulnerability of the chain was conducted by accessing the opportunities-related vulnerability of each stage using stage-targeted fraud factor/indicators (Table 6) and combined with the whole chain targeted factor/indicators (Table 7) to have the overall opportunities-related vulnerability of the whole chain. The assessment of motivations-related vulnerability of the chain was conducted using the fraud factor/indicators in Table 7. The opportunities and motivations related vulnerability of the nine stages and the whole chain are described below.

Primary production

The primary production stage of the food supply chain includes agricultural activities, aquaculture and other similar processes related to raw food materials39. Regarding the ginger supply chain, activities in this stage related to the harvest, handling, and storage of fresh ginger before it moves to either processing or distribution. At this stage, farmers may use acid wash ginger or use sulphur smoke ginger (unapproved/undeclared processing) to improve the appearance of the ginger, as reported on social media40,41. Such fraudulent activities do not require advanced technology, methods and/or facilities suggesting the factor/indicator ‘Availability of technology and knowledge to commit food fraud on final products’ is high vulnerability (Table 6 – Question 1 – Answer option 3 – score 3). Unapproved/undeclared processing of ginger is easily identified by the abnormal odour and colour of ginger, therefore, the fraud factor/indicator ‘Detectability of food fraud in final products’ is low vulnerability (Table 6 – Question 2 – Answer option 1 – score 1)42. This fraudulent behaviour was reported by the media, but it is less common in China recently, hence the ‘Historical evidence of fraud in final products’ is assigned a medium vulnerability level (Table 6 – Question 3 – Answer option 2 – score 2). Altogether, the frequency of all three factor/indicators is equal, no highest frequency and corresponding vulnerability can be determined at this stage.

Local collection

For the local collection stage (Stage II) of the supply network, the collectors purchase ginger from farmers and rarely process the ginger. At this stage, collectors do not process ginger, the factor/indicator ‘Availability of technology and knowledge to commit food fraud on final products’ is not applicable at this stage. However, unapproved/undeclared processing of ginger may already happen at the primary production stage (Stage I), and it is still easy to be noticed. Therefore, the factor/indicator ‘Detectability of food fraud in final products’ is low vulnerability (Table 6 – Question 2 – Answer option 1 – score 1). In addition, there is no information about the ‘Historical evidence’ at this stage. However, one common issue at this stage is the loss of traceability43. The main reason for this loss at the local collection stage might be due to the lack of traceability standards between farmers and collectors44. Paper-based systems are widely implemented for food traceability across the whole food industry45. While such systems are cheap they can lack accuracy in the recording and storage of data44. Robust digital systems for traceability are more expensive to implement, operate and maintain46. For smallholder ginger farmers who live in remote districts, it is difficult and costly to implement and apply such advanced systems for traceability. Based on the available information, the opportunities related vulnerability at this stage cannot be determined.

Local processing

Local processors obtain fresh ginger from local collectors on a regional basis. At Stage III, local processors may perform some basic processing, such as cleaning, sterilization packing and grinding or fine process into other form47. Adulteration may occur at this stage when ginger is ground into powder or processed into other forms43. Fraudsters may add inferior material to ground ginger to increase its weight or they may add unauthorized ingredients to enhance certain qualities of ginger for profit29. For instance, adding powdered beans to ground ginger to increase weight and adding Sudan dyes for a more vibrant colour48,49. Because simple/basic technologies and methods are available, and no specialist facilities are required, to adulterate the materials/products, the ‘Availability of technology and knowledge to commit food fraud on final products’ is high (Table 6 – Question 1 – Answer option 3 – score 3). In addition, from the previous investigation of the literature and food fraud databases, even though the fraud issues in ginger are not as common as in expensive spices, adulteration is the main issue that usually happened during ginger processing and there is a lack of robust techniques for detecting ginger adulteration. Hence, the factor/indicator ‘Detectability of food fraud in final products’ is high vulnerability and the factor/indicator ‘Historical evidence of fraud in final products’ is medium (Table 6 – Question 2 – Answer option 3 – score 3, Table 6 – Question 3 – Answer option 2 – score 2). To sum up, the opportunities related vulnerability at the local processing stage is high because the high vulnerability has the highest frequency.

Local market

There are four actor groups within the local market stage (Stage IV); the wholesaler, retailer, food manufacturer and food service operators. The common fraud issue at this stage is deliberate misrepresentation/mislabelling36. For ginger products, deliberate misrepresentation can be around the geographical origin or production system claims50,51. This fraudulent issue does not require advanced technologies, methods, facilities and/or knowledge because no additional processing is needed on ginger. Therefore, the factor/indicator ‘Availability of technology and knowledge to commit food fraud on final products’ is high vulnerability (Table 6 – Question 1 – Answer option 3 – score 3). Although some studies has been conducted to identify the misrepresentation/mislabelling issues in ginger products, those methods usually need advanced equipment and trained analysts are needed for its detection52. Moreover, such laboratory tests are usually expensive and time-consuming. Based on the description of ‘Detectability of food fraud in final products’, the vulnerability related to this factor/indicator is medium (Table 6 – Question 2 – Answer option 2 – score 2). According to the results of the literature and food fraud databases, there are limited cases/documentations (five statements), hence, the fraud factor/indicator ‘Historical evidence of fraud in final products’ is medium vulnerability (Table 6 – Question 3 – Answer option 2 – score 2). To that end, the opportunities relate vulnerability at this stage is medium because the medium vulnerability has the highest frequency.

International trade

At Stage VI, the ginger products from China are transported to the EU. Exporters and agents are working as an intermediary between the Chinese market and the EU market. According to the Guidance on Authenticity of Herbs and Spices36, the purchase of low-grade materials and the occurrence of mislabelling often happen at this stage in the herb and spice industry supply chain. The main fraud issue at this stage is the same as that at the local market stage. Consequently, the factor/indicators for this stage, including ‘Availability of technology and knowledge to commit food fraud on final products’, ‘Detectability of food fraud in final products’ and ‘Historical evidence of fraud in final products’ have the same vulnerability as the local market stage which were high, medium, and medium vulnerability, respectively. According to an interview with EU processors, to prevent food fraud, they only trade with exporters and agents who are trustworthy and have long-term partnerships. However, this cooperation model may lead to the EU processors being over-dependent on their exporters and agents. One of the interviewees from an EU spice company stated that all information about their purchase of ginger products came from their Chinese agents. Therefore, excessive reliance on agents or exporters creates fraud vulnerability at the international trade stage. To sum up, the opportunities related vulnerability at this stage is medium since the medium vulnerability has the highest frequency.

EU processing

The EU processors group of Stage VII is one of the most significant actor groups within the ginger supply chain network. Most of the ginger products in the EU market come from the EU processors. In addition to the basic processing such as cleaning, sterilization and grinding, the EU processors may further process ginger into other ginger products, for instance, pickled ginger, preserved ginger, and crystalized ginger depending on the companies. Like local processors in China, adulteration of ground ginger is still the main fraud issue at this stage, such as adding spent ginger to ground ginger53. Therefore, the EU processing stage has the same opportunities related vulnerability as the Local processing stage, which is high vulnerability. In addition, all interviewees at this stage claimed that they had confirmed the authenticity of their products and believed that the fraud issues they knew always came from other actor groups in the ginger supply chain. However, the questions related to food fraud may touch on the sensitivities of potential offenders, therefore, we presumed the interviewees might answer the questions in a more reserved or socially acceptable way. This behaviour is consistent with the ‘alien conspiracy theory’, which describes that crime as a problem from outside parties, rather than a part of the own direct environment/society54.

The EU market

Stage VIII consists of six actor groups that directly sell ginger products to EU consumers. At this stage, the fraud vulnerability would be knowingly placing mislabelled products on the market43. Therefore, the same in the local market, the opportunities related vulnerability at this stage is medium.

Consumers

At Stage V and Stage IX of the spice supply chain, local (Chinese) and EU consumers receive the final products circulating within the entire supply chain network. At these stages, it is likely that the products may already be tampered with if it has been vulnerable to food fraud at earlier stages of the network55.

The overall opportunities and motivations related vulnerability of the whole chain

The overall opportunities related vulnerability of the whole chain

The nine stages of the ginger supply chain from China to the EU and corresponding opportunities and motivations related vulnerability have been compiled in Fig. 2. The low, medium, and high vulnerability respectively corresponded to green, orange, and red colours for better visualization. The overall opportunities related vulnerability of the chain based on the results of nine stages is medium to high vulnerability because medium and high vulnerability have the same frequency. The local processing and EU processing have high opportunities related vulnerability compared with other stages. According to the theoretical framework of the FFVA tool, more robust internal hard controls should be applied at these two stages to counterweigh the high vulnerability in opportunities1.

Fig. 2: Visualization of the opportunities and motivations related vulnerability in ginger supply chain from China to the European Union (EU).
figure 2

Note: Number 1, 2 and 3 reflected a low, medium, and high vulnerability level.

In addition to the indicators targeting each stage, five additional Opportunities related indicators for the whole were also considered. The raw material (raw ginger) of the whole supply chain is consistent, therefore the factor/indicators related to raw material were considered based on the whole supply chain. For the factor/indicator ‘The complexity of committing food fraud on raw materials’, the physical status of raw ginger is in line with the description of Table 7 – Question 1 – Answer option 1 – score 1, which is low vulnerability. As discussed in the primary stage, the unapproved/undeclared processing of raw ginger does not require advanced technology/knowledge and can be easily noticed by odour and colour, therefore, the factor/indicator ‘Availability of technology and knowledge to commit food fraud raw materials’ is high vulnerability (Table 7 – Question 2 – Answer option 3 – score 3) and the factor/indicator ‘Detectability of food fraud in raw materials’ is low vulnerability (Table 7 – Question 3 – Answer option 1 – score 1). The factor/indicator ‘Historical evidence’ for the raw ginger is less common, consequently, this factor/indicator is medium vulnerability (Table 7 – Question 5 – Answer option 2 – score 2). For the factor/indicator ‘Transparency of the supply chain network’, the information from 13 relevant articles used to map the ginger supply chain indicated that the ginger supply chain is not fully transparent, there is a lack of research on the structure of the chain. Accordingly, the ‘Transparency of the supply chain network’ is medium vulnerability (Table 7 – Question 4 – Answer option 2 – score 2). To bring the factor/indicators targeting each stage and the indicator targeting the whole chain together, the overall opportunities related vulnerability of the whole ginger supply chain from China to the EU is medium since the medium vulnerability has the highest frequency.

The overall motivations related vulnerability of the whole chain

For the motivations-related vulnerability, all six motivations-related indicators are targeting the whole supply chain. Regarding the factor/indicator ‘Economic situation of the raw materials’, the ginger products fit the description of medium vulnerability (Table 7 – Question 6 – Answer option 2 – score 2) i.e., stable prices but the supply of raw materials are not readily available and export bans on raw materials exist in a few countries. The price of ginger is stable compared with expensive spices which have big price fluctuations, such as black pepper56. However, the export ban existing in a few countries makes ginger is not readily available all the time57. For the factor/indicator ‘Valuable components or attributes of products’, the ginger products fit the description of high vulnerability (Table 7 – Question 7 – Answer option 3 – score 3), i.e., the value of materials/products is greatly determined by its composition, way of production and/or origin. The factor/indicator ‘Corruption level in the country’ is low to medium vulnerability, since the corruption index is medium (66) for China and low for top import countries (Netherlands 8, Germany 10). The vulnerability of the factor/indicator ‘Economic conditions branch of the industry’ is low because the ginger industry is operating in a growing market according to Tridge (Table 7 – Question 9 – Answer option 1 – score 1). The information from Tridge also indicated that the factor/indicator ‘Price asymmetries’ is medium vulnerability since the price of ginger is different in some regions and countries (Table 7 – Question 10 – Answer option 2 – score 2). The last factor/indicator ‘Historical evidence branch of the industry’ was determined by fraud prevalence in ginger in previous section, there is well-known and documented evidence of fraudulent activity across the ginger supply chain. Therefore, the ‘Historical evidence branch of the industry’ is high vulnerability. In conclusion, the motivations related vulnerability of the ginger supply chain is medium vulnerability due to the high frequency of the medium vulnerability.

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