A new police force should be created to combat fraud in the food supply chain because the risk of criminal activity is so great, according to an independent inquiry launched in the wake of the horsemeat scandal.

Prof Chris Elliott, the inquiry chairman, warned that the sector is a "soft touch" for criminals who know there is little risk of detection or serious penalty, that the Food Standards Agency is insufficiently robust, and that the industry's audits are inadequate to detect food crime.

So uncompromising was Elliott's independent review of the integrity of the food network that its conclusions have led to tensions with the government. Owen Paterson, the environment secretary, and the food industry chose instead to concentrate on Elliott's finding that the UK food system is one of the safest in the world in terms of hygiene.

But Elliott says they are so focused on this aspect of food safety that they have failed to understand how serious the risk is from criminal activity. He also called for urgent investigation into whether these groups also cross over to networks already established in trafficking drugs, cigarettes, fuel, firearms or people.

The new food crime unit, the Elliott review concluded, should be set up as a non-Home Office police force.

The report also highlights several types of food that need to be priorities for intelligence gathering about possible criminal activity:

• One supplier of meat products who describes a retailer asking him to produce a "gourmet burger" for an unrealistic unit price of under 30p. The supplier believed that by using the cheapest beef available from older cows and factoring in fixed costs, the lowest possible unit price would be 59p. The ways a supplier might meet the unrealistic price specified would be to switch to meat from premises not approved by the EU, or to add in offal, such as heart or mechanically separated meats.

• Fish is particularly vulnerable to several forms of fraud through substitution, relabelling and adulteration.

• Premium products whose sales appear to outstrip the market supply, such as New Zealand manuka honey, whose UK sales alone outstrip total global output, and pomegranate juice, marketed as "superfruit", an explosion in sales of which appears to outstrip the time it would take to grow trees to produce it.

Products the report highlights as priorities for investigation include pomegranate juice. Photograph: Adrian Mueller - Fabrik Studios/Getty Images

• Products with complex production chains, such as Spanish olive oil that is bottled in Italy, or products where premiums can be charged for specific provenance, such as Aberdeen Angus burgers.

The Elliott report also raises concerns within the industry that a significant amount of meat that has been condemned for rendering because of its potential to cause disease is being recycled as meat eligible for pet food.

The team separately heard of a previous case in which pet food was recycled into the human food chain. Both the industry and the government need to acknowledge the risks of meat that is not fit for human consumption entering the human supply chain, Elliott warns.

Aggressive supermarket buying practices are also singled out for criticism as well as "too good to be true" cheap offers. Elliott recommends that they and other sellers should be held criminally liable if they sell mislabelled meat to consumers, so putting the onus on them to check their suppliers.

If retailers buy consistently below the market price, the inquiry argues that they should have to prove not just that they have a paper trail but that they have checked there are no grounds to suspect the goods are counterfeit or "criminal property" – or risk being guilty of complicity in crime.

In sharp criticism of the lack of prosecutions for horsemeat and the inadequacy of current sanctions, the report says anyone selling meat that is mislabelled should be considered criminally liable.

The system of auditing is also described as inadequate to detect fraud and needs to switch from announced to unannounced inspections as well as random sampling.

However, Paterson said the government had taken action in response to the horsemeat adulteration scandal, with increased unannounced inspections, as well as food industry and Food Standards Agency testing to check that foods were what they claimed to be.

"It is appalling that anyone was able to defraud the public by passing off horsemeat as beef," Paterson said.

"The UK food industry already has robust procedures to ensure they deliver high-quality food to consumers and food businesses have a legal duty to uphold the integrity of food they sell.

"It is rightly highly regarded across the world and we must not let anything undermine this or the confidence of consumers in the integrity of their food."

Huw Irranca-Davies, the shadow food minister, called for the prime minister to reverse his "misguided decision to fragment the Food Standards Agency" which meant that responsibility for food safety and authenticity had been separated.

Both the Food and Drink Federation and the British Retail Consortium, which represent manufacturers and supermarkets respectively, said their members had introduced extra checks on the integrity of their products since it emerged earlier this year that some meat intended for human consumption had been adulterated with horsemeat.

Helen Dickinson, director of the BRC, said: "We are pleased Professor Elliott makes it clear UK supply chains are among the safest in the world and that he is addressing the specific issue of food crime, an issue that warrants serious attention.

"We absolutely share his focus on consumer confidence."

But the consumer organisation Which? said it was time to return responsibility for food labelling and standards back to the Food Standards Agency.

"We support these steps towards a joined-up approach to food fraud to tackle the web of confusion exposed by the horsemeat scandal," the Which? director, Richard Lloyd, said.

Which? research last month found that half of consumers had changed their shopping habits as a result of horsemeat adulteration, with a third saying they also bought less meat than before.

Which? found a third of consumers say they are buying less meat since the horsemeat scandal. Photograph: Alamy

How to produce a 'gourmet' burger for less than 30p

The Elliott review looks at "the murkier practices that often go unnoticed within food supply chains". It gives the bargain burger as an example.

One supplier of carcass meat and meat products told Professor Elliott of a meeting his company had had with a retailer in which he was asked to produce a 4oz "gourmet" burger for a unit price of under 30p. The supplier believed that by using the cheapest beef available (from older cows rather than prime young beef), priced at £2.64 per kilogramme, and factoring in fixed costs including labour, packaging and transport, the lowest possible unit price for the burger would be 59p. To produce one for less than 30p would only be possible if the average market price of beef was 85p/kg, ie one third of what it really was.

The Elliott team and the supplier then considered how it would be possible to produce a gourmet burger to this price specification. A simple short cut would be to buy beef from premises that were not EU-approved, at about £1.40/kg. They could get the price down further by using offal, such as heart meat which trades at between 70p-£1.10/kg. Using some mechanically separated meat, which trades at market prices of about £1.20/kg, is another possible way of driving down the unit cost.

If the product was made with meat from EU-approved premises and correctly labelled as containing offal and MSM, it would be legitimate, although Elliott says: "I very much doubt the description 'gourmet' could be applied." He adds: "Anecdotal evidence from producers suggests that as raw material passes through many different hands, descriptions may have changed by the time the finished product finally reaches the shelves."