Counterfeiting in the Primary Industry Sector and the Threat to New Zealand’s Economy

Authors: Ball, R. & Quirke, S.
Published in National Security Journal, Volume 1, Issue 1, October 2019

The sector is also vulnerable to counterfeiting, as well as other forms of intellectual property theft that can, if neglected, present health risks, cause economic and reputational loss, and directly affect national interests. OECD data suggested that the volume of international trade in counterfeit, pirated or illicit products was estimated to have been “as much as USD$509 billion”, or 3.3% of world trade, in 2016.3

After a period that saw this country manage high profile counterfeit and contamination-related scandals in the food products sector, in 2012 the Ministry for Primary Industries (MPI) acknowledged that it had “no control over counterfeiting”.4

Local media investigations at the time highlighted three important issues facing the dairy sector in particular; counterfeiting existed in the industry and the need for brand protection was seen as a serious concern for the dairy industry; there was no collaboration between government and industry regarding counterfeiting; and there appeared to be no government department taking ownership of counterfeiting in New Zealand or abroad.5

Although the primary industries sector is in regular contact with the MPI, the Ministry of Business, Innovation and Employment (MBIE), Ministry of Foreign Affairs and Trade (MFAT) and related organisations, there remains no explicit policy or strategy sector framework for anti-counterfeiting initiatives designed to protect New Zealand’s export markets. Despite isolated prosecutions, it can be argued that New Zealand still lacks the ability to adequately forewarn, let alone systematically address, counterfeiting in the primary sector.

Being a complex area with multiple definitions, there is limited understanding of the extent of the phenomena as it applies to the New Zealand primary products industry. This article presents an analysis of counterfeiting examples within a selection of primary industry sectors – wine, kiwifruit, apple and pear, mānuka honey and dairy.

We use a collective literature review,6 these selected cases, public sector commentary and industry interviews to develop a typology of counterfeiting so as to offer a starting point to better understand the complex nuances of such activity. By presenting a primary product counterfeit typology, this research will help identify further strategies that may assist in the development and implementation of a more integrated proactive set of counter-measures for industries with explicit raw material and processed product counterfeit vulnerabilities.

The World Trade Organisation (WTO) Glossary defines counterfeiting as the “unauthorised representation of a registered trademark carried on goods identical or similar to goods for which the trademark is registered, with a view to deceiving the purchaser into believing that he/she is buying the original goods.”7

In the United States, food fraud is a “collective term that encompasses the deliberate substitution, addition, tampering, or misrepresentation of food, food ingredients, or food packaging, or false or misleading statements made about a product for economic gain.”8 Moore et al add that further terms are often used to describe product fraud associated with food including “economic adulteration, economically motivated adulteration [EMA] and food counterfeiting.”9