The High-Stakes World of Food Smuggling

THE HIGH-STAKES WORLD OF FOOD SMUGGLING: FROM GOLDEN KIWIS TO BLACK MARKET LOBSTERS.

In 2016, an international smuggler was fined $9.8 million for attempting to smuggle golden kiwi sprouts into China. A few years earlier, thieves stole $8.4 million worth of Quebec's pure maple syrup. In 2022, authorities apprehended smugglers transporting $2.2 million worth of clear pearl lobsters from Indonesia to Singapore. Many of the world's most expensive foods are smuggled, often because smugglers can lower prices through illegal means. However, some smugglers claim to have legitimate reasons for their actions.

So, what drives food smuggling, and how are governments and food producers combating it? Smugglers often target high-demand products, creating black markets to exploit environmental protections that limit supply or to profit from specific household brands. New Zealand's golden kiwis and Canada's maple syrup fall into this latter category. These products can't be grown just anywhere, and the limited supply keeps prices high, attracting smugglers.

Canada’s pure maple syrup was at the center of one of the country’s largest heists. Pure maple syrup is rare and labor-intensive to produce; a bottle can cost over $40, nearly 15 times more than popular imitation syrups, which are usually made from corn or cane syrup with a bit of maple flavoring. Although this syrup may be tapped in New York or Vermont, Canada remains the leading producer, with Quebec at the forefront. Syrup from Quebec is strictly regulated by the Quebec Maple Syrup Producers Federation, which sets quality standards, prices, and quotas for tree tapping.

In 2012, journalist Brendan Burell reported that there were about 7,000 maple syrup farms in Quebec, with 1,200 more on a waiting list. New farms were not added, leading to an underground market where surplus syrup from other Canadian provinces and the U.S. was sold for cash. The Federation stored about 10% of Quebec's production each year in a warehouse, ensuring a constant supply even during poor harvests. However, this also laid the groundwork for the Great Canadian Maple Syrup Heist, where an insider allowed a gang to siphon syrup, replacing it with water to avoid detection. Between 2011 and 2012, $8.4 million worth of syrup was stolen.

This heist impacted syrup demand and payment for farmers, although production continued to rise. By then, Quebec was no longer the sole player in the market; Vermont’s production increased significantly, and the market dynamics shifted. The debate continues between those advocating for a controlled, socialist approach versus those supporting a free market philosophy that suggests pulling back on laws and taxes to reduce smuggling.

Another smuggling issue involves New Zealand's golden kiwi. This unique fruit, sweeter and softer than green kiwis, is controlled by Zespri, a cooperative of kiwi growers. Zespri's SunGold variety has an export value of $253 million New Zealand dollars. Growing golden kiwis is highly lucrative, leading to a feud between New Zealand and China. Zespri releases only a limited number of licenses each year, and in 2022, the median price for a SunGold license reached $81,000.

After a kiwi grower smuggled SunGold sprouts to China, illegal orchards proliferated there. Despite a $14 million fine imposed on the smuggler, the number of unauthorized orchards surged. By 2022, China had 12,000 hectares of golden kiwis compared to New Zealand’s 9,000. Zespri anticipates a reduction in Chinese orchards but continues to fight legal battles against individual growers.

The issue highlights how intellectual property rights extend beyond consumer products to agricultural innovations. At a New Zealand orchard in Kerikeri, golden kiwis are carefully harvested, often taking five years to produce a crop ready for harvest. The extensive labor and investment in developing new seeds make smuggling a significant problem, undermining both revenue and brand integrity.

Smuggling also affects other high-demand foods. For instance, Nigerian smugglers target stockfish, a cod dried by cold air and wind, which is expensive and in high demand. To evade import duties, smugglers transport stockfish through neighboring countries with lower taxes. Despite Nigeria closing its land borders in 2019, illegal trade persisted. Simplifying the legal import process has helped, but smuggling remains a challenge.

Similarly, the demand for fish maw, a prized organ of fish used in Chinese cuisine, has led to smuggling issues. With local waters overfished, fish maw is predominantly imported from countries like Uganda. Smugglers exploit this high-value market, leading to significant revenue losses and affecting local fishermen.

In Indonesia, the smuggling of pearl lobsters—known for their blue-green shells and high market value—has become a major issue. Despite Indonesia’s attempts to regulate exports, smugglers continue to transport lobsters illegally, resulting in losses estimated at over $64 million in 2019. The government has resumed regulated exports to Vietnam, which relies on imported lobsters for its farms.

Lastly, smuggling also threatens endangered species, like the European eel. Angulas, the young eels, are highly valued in Spain, with prices reaching over $7,000 per kilogram. Despite strict fishing quotas, illegal fishing persists. In 2017, Spanish police uncovered a major trafficking operation, and recent years have seen significant seizures of smuggled eels. This drives up the price for legally caught eels, making it increasingly difficult for licensed fishermen.

Overall, smuggling exacerbates environmental issues and damages trade relationships. It introduces invasive pests and disrupts markets, with significant impacts both locally and globally.