Material Details Controllable Factors

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5 5 5 45 Change the Supplier Supplier Blacklisted Criteria

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4 5 4 37 Immediate Attention Required Audit Done 9-17 :L

1 5 1 28 Attention Required Informed to Supplier 18-26 :M
1 1 1 24 Monitoring Required Extensive Sampling 27-35 :M
Not Applicable
36-44 :M
1 1 1 9 No Action Required
>44 :H
1 1 1 9 No Action Required Not Applicable
1 1 1 9 No Action Required Not Applicable
Criteria
9-17 :Low Risk -> No Action Required
18-26 :Medium Low Risk -> Monitoring Required
27-35 :Medium Risk ->Attention Required
36-44 :Medium High Risk ->Immediate Attention Required
>44 :High Risk -> Change the supplier
Supply chain

Low: Firm vertically integrated—The ingredient is not sourced from third parties but is sourced directly
from another part of the food-producing firm. In the case of agricultural ingredients, this means that the
firm produces the raw agricultural product that is used as the ingredient. For example, the firm milks
the cows, and produces the skimmed milk powder that is then used as the ingredient in a product. Or,
all juice is produced from fruit from company-owned farms. Assuming that policies regarding
ingredient quality are uniform throughout the firm, this would present the least vulnerability for
ingredient fraud. However, while this illustrates the scenario of least vulnerability, policies backed by
internal audits need to be in place to ensure that all parts of the organization are acting ethically.

Medium-Low: Supplier vertically integrated— The ingredient is sourced from a known, trusted
supplier who produces the raw agricultural product that is the starting pointing for the ingredient. Using
the example described above, the supplier owns the fields where the cows graze and owns the facility
where the milk is transformed into skimmed milk powder. The ingredient is then sourced directly from
the supplier. In this scenario, the supplier does not buy either raw or processed agricultural product
from another supplier. Here the vulnerability is limited by knowledge of the supplier and trust that is
verified by audits.

Medium: Supplier manufactures—The ingredient is sourced directly from a primary supplier who
manufactures the ingredient but buys either raw or processed agricultural products from another party.
Using the example above, the supplier buys milk from independent farmers but owns the facility that
manufactures the skimmed milk powder and the ingredient is sourced directly from the supplier. Here
there is limited concern for possible adulteration of the raw agricultural product by parties unknown to
the supplier. However the onus is on the primary supplier to ensure that their supplier (secondary
supplier) has fraud prevention programs in place that are comparable to the primary supplier's own.

Medium-High: Upstream supplier manufactures—The ingredient is either composed of a blend of

components each manufactured by a third party, or the ingredient is subject to processing by a third
party manufacturer before final processing by the supplier. This scenario might describe custom
blends of juice concentrates where the supplier produces the blend from concentrates from different
suppliers. Similarly, it could describe a scenario in which the supplier acts as an agent and blends,
repackages, or otherwise reprocesses ingredients from other suppliers, for example, a supplier might
supply a spice blend that is composed of paprika along with spices and ingredients from multiple
suppliers. The degree of vulnerability increases with the number of suppliers involved in the process.

High: Open market—This scenario describes the situation where in an ingredient is sourced in the
open market and none of the other scenarios described above can be verified as being applicable.
While it is possible that an ingredient could be sourced in the open market from a supplier with an
integrated supply chain, this scenario assumes that a purchase on the open market limits the buyer's
ability to verify that the supply chain is 1) integrated, and 2) that appropriate controls are in place to
prevent fraud. This does not mean that all ingredients purchased in the open market are vulnerable to
fraud; it means that the buyer has less ability to verify that procedures to prevent fraud are in place.
BACK
Audit strategy

Low: Robust, onsite, with numerous anti-fraud measures—This category describes a case where a
robust and mature onsite audit strategy is in place that includes numerous anti-fraud measures.

Medium-Low: Robust, onsite, with limited anti-fraud measures—This category describes a case
where a robust and developing onsite audit strategy is in place that includes a limited number of anti-
fraud measures.

Medium: Immature, onsite, no anti-fraud measures—This category describes a case where an onsite
audit strategy has been implemented, but is currently immature and contains no anti-fraud measures.

Medium-High: Currently developing an onsite audit strategy—This category describes a case where
an onsite audit strategy is currently being developed and implemented.

High: No onsite audits—This category describes a case where no onsite audit strategy is used.
BACK
Supplier relationship

Low: Trusted Supplier—This supplier is one with whom the buyer has established a partnership-type
arrangement. The supplier and ingredient were on-boarded many years ago, and a high degree of
confidence has been established through a long positive business relationship history and/or through
testing programs. There is sharing of key information and expectations, including an understanding of
key needs and controls in the both buyer and supplier processes. There is an open and responsive
sharing of market intelligence and open communication on what each company is doing to protect its
products. For example, if information is presented to the supplier suggesting that someone may be
adulterating an ingredient from a specific country, the supplier responds that they are aware of the
problem and are not sourcing from that region; that they have a vertically integrated process which
avoids these issues; or that specific testing is occurring to identify any threats. This helps to assure
that issues which arise are inconsequential and can be quickly resolved.

Medium-Low: Trusted Supplier, New Ingredient—This category of supplier fulfills all the requirements
of a "Dedicated Supplier," with the exception that the buyer only recently began purchasing this
particular ingredient from the supplier. A high degree of confidence in the supplier has already been
established through purchases of other ingredients but not the one under consideration. You have on-
boarded the new ingredient and begun a tiered testing program.

Medium: Established Supplier, Some Relationship—A short history of business with the supplier
exists, the supplier is well respected in their market with a solid reputation, and no significant issues
have been identified through discussions with other customers or public information. The supplier has
been on-boarded and a tiered testing program has been implemented.

Medium-High: Established Supplier, No Relationship—The supplier is respected in the marketplace,

has a solid reputation, and has been on-boarded; however, a business relationship and history has
not yet been established.

High: Unestablished Suppler, No Relationship—This is often a new supplier, with whom the buyer
does not have any history or general industry knowledge of the supplier. Relationship time frames and
issue ratings should be developed based on purchaser business practices and re-evaluated on a
regular basis.
BACK
History of supplier quality and safety issues

Low: No known issues—The buyer has no direct knowledge of quality or safety issues on the part of
the supplier, and a review of public records did not identify any.

Medium-Low: Few minor issues which were quickly resolved—Very few and/or minor issues that
were adequately resolved by the supplier within a reasonable time frame.

Medium: Recurrent issues or issues which were not resolved quickly or adequately—Persistent
quality or safety issues or those which were not resolved adequately.

Medium-High: Multiple persistent issues or some evidence that adequate controls are not in place

High: Numerous uncorrected/continuing issues or undeniable evidence that the extent of quality or
safety concerns is unacceptable
BACK
Susceptibility of quality assurance (QA) methods and specifications

Low—Methods are more than sufficiently selective and specific, given the complexity and variability of the
ingredient. Specifications only allow for natural variability inherent to the ingredient.

Medium-Low—Methods are sufficiently selective and specific, given the complexity and variability of the
ingredient. Specification ranges allow for natural and analytical variability.

Medium—Methods are selective, but not specific and specifications reflect same.

Medium-High—Methods may be of limited selectivity and specificity and specifications reflect same.

High—Methods are neither selective nor specific and specification ranges are broader than natural and
analytical variability.
BACK
Testing Frequency

Low: With a trusted supplier and an audit process that is robust, testing can provide verification
that all processes are working as planned. Frequent testing provides both verification that the
processes are working and when the methods are capable of detecting “suspicious” activity,
serves as both deterrence and early warning for follow up.

Medium low: Routine testing provides limited assurance that the processes are working, and
provides limited deterrence but does not provide enough information to spot trends.

Medium: In this scenario testing may be performed with high frequency in an attempt to
overcome the shortcomings of supplier development of audit processes. High frequency testing
in this scenario provides assurance about all lots of ingredients used in production. The high
frequency of testing may allow for the spotting of trends or suspicious activity. Because of the
heavy emphasis on testing to mitigate vulnerability, gaps due to limitations of methodology rise in
importance.

Medium high: While this is better than no testing, testing in this scenario provides assurance
about the tested lot and some benefit of deterrence. Very limited information will be available to
spot suspicious activity.

High: No testing or COA.

BACK
Fraud history

Low—Little to no volume of reports and no substantiating evidence.

Medium-Low—Moderate volume of reports and no substantiating evidence.

Medium—Numerous reports and limited substantiating evidence.

Medium-High—High volume of reports with some carrying high degree of substantiating evidence.

High—High volume of reports, including on-going incidents that carry a high degree of substantiating
evidence.
BACK
Geopolitical considerations

Low—Ingredient is single component sourced from a single geographic origin of low concern:
Ingredient is a single component that has been sourced from a single geographic origin that is
considered to have low vulnerability to food fraud. Such a region would be described by a
combination of factors, including but not limited to: political stability; developed region of stable
population size and growth, with a relatively low level of poverty and good GDP rating; source
region places a high priority on a well-developed food control system/regulatory and enforcement
framework; little or no history of instances of food fraud, and with a low prevalence of organized
crime and corruption (e.g., as indicated by relevant indices). It should be noted that even if all of
these indicators would indicate a lower potential for food fraud, it does not preclude the
possibility: e.g. "Horse-gate" in Europe in 2013 (fraudulent adulteration or substitution of ground
beef with horse meat) which likely would have been detected through other factors in this
Guidance.

Low-Medium—Several components sourced from geographic origins(s) of low concern:

Ingredient is composed of multiple components that may have been sourced from several
geographic origins that are all considered to have low vulnerability to food fraud as described in
the "low susceptibility" category. None of the components would have originated from or transited
through a region considered to have a medium vulnerability to food fraud but there have been
additional opportunities for food fraud to take place over and above the low category.

Medium—Single component originated or transited through regions with some geopolitical

concerns: Ingredient is composed of a single to few components that have originated in one or
more countries that exhibit some of the vulnerabilities listed above or in which one or more of its
components have transited through such a region. A geographic origin considered to have
medium vulnerability to food fraud could be described as being in between the two extremes
(low, high), where a combination of factors might include a transition from developing to
developed economy, occasional political and social unrest, but where some priority is given to
substantial improvement in the established food control system/food safety regulatory and
enforcement framework, a population/GDP/political system leading to a medium level of poverty,
and where organized crime and corruption does exist to a medium extent (again based on
indices), leading to some instances of food fraud, but where such fraud is also a priority to be
seriously addressed currently and in the future.

Medium-High—Several components; some originated or transited through regions with some

geopolitical concerns: Ingredient has several components, many of which have originated in one
or more countries that experience some of the vulnerabilities listed above, or one or more of the
ingredients components have transited through such regions. None of the components would
have originated from or transited through a region considered to be highly vulnerable to food
fraud.

High—One or more component originated or transited through one or more regions exhibiting
several characteristics of geopolitical concern: Ingredient contains one or many, any of which
may have originated in a region that experiences many of the vulnerabilities listed above, or one
or more of the ingredient’s components have transited through such a region. A geographic
origin considered to have high susceptibility to food fraud might be described as still developing,
possibly politically and socially unstable or at least have the potential to be so based on history,
with a large and increasing population (unstable growth compared to GDP and poverty
measures; government and social systems unable to cope leading to high poverty rate), where
there is a low priority placed by government on a well advanced food control system/food safety
regulatory and enforcement framework (due to many other social and political priorities), and
consequently a high prevalence of organized crime and corruption and a substantial history of
occurrence of food fraud instances.
BACK
Economic anomalies

Low: Nothing unusual—No examples of unusual economic behaviour are available.

Medium-Low: Isolated anomalies—While there are some unusual economic indicators, they
appear to be random with no consistent pattern by geography, commodity/product, or company.
These could be one-off attempts or reflect temporary imbalances such as early or late harvest of
a fresh produce item resulting in limited pricing changes.

Medium: Frequent but unrelated anomalies—Anomalies are not uncommon but show no
commonality by geography, commodity/product or company. These may represent opportunists
taking advantage of predictable market dynamics such as seasonal shifting of sourcing or post-
natural disaster supply chain disruption. As one example, following a tsunami in 2011 that
decimated the Chilean scallop beds, there were cases of fraudulently labeled seafood cut to
appear to be scallops, but no widespread fraud was identified.

Medium-High: Common but focused anomalies—Anomalies are common, but only with respect
to a geography, commodity/product, or company. These can represent specific companies
utilizing fraud as an acceptable business practice or lax oversight of a specific
commodity/product in a country. The melamine adulteration of dairy products in China in 2008 is
an example where pricing for milk and dairy products across China was below comparable levels
in the rest of the world while production was increasing at a rate much faster than the rest of
China's agriculture production.

High: Common and broad anomalies—Anomalies are not confined to one country, one
commodity, or one company. These can represent either broad industry acceptance of a type of
fraud as being acceptable or the dissemination of a fraudulent ingredient broadly through
complicated supply chains. The European horsemeat scandal, potentially identifiable by the
significant difference between the price of horsemeat relative to beef, was magnified by the
utilization of the low cost, fraudulent ground meat by many companies in a broad range of
products.
BACK