Fraud is so widespread in the UK food and drinks industry that it costs the country as much as £11bn a year, according to an alarming new report - which also found that little more than three per cent of it gets detected.

People are siphoning off cash at every stage in the supply chain, with each participant short-changing the next, whether it be in terms of quality or quantity, by substituting ingredients, making false claims or simply stealing money, researchers found.

The cost of this fraud is ultimately borne by the consumer, contributing the equivalent of 5p to the cost of a £1 loaf of white bread, £33p to a £6.00 bag of white rice and 11p to a £2.00 box of half a dozen eggs. This equates to around £424 per household per year.

“Food and drink fraud is the crime in our baskets,” said Jim Gee, co-author of the report, and head of forensic and counter fraud services at PKF Littlejohn. “It results in food and drink being more expensive than it should, and its reduction can significantly improve value for money,” he added.

The fraud encompasses everything from using lower grade flour than claimed in a loaf of bread or adding filler such as chalk to claiming a chicken is free range when it has spent its entire life in a cage.

It also involves pilfering, giving slightly less than the agreed amount, substituting ingredients, such as horse for chicken or donkey for beef, and claiming organic status where none is merited, according to the report, called Minimising Fraud and Maximising Value in the UK Food and Drink Sector 2014.

In pictures: Britain's favourite comfort food Show all 10 1 /10 In pictures: Britain's favourite comfort food In pictures: Britain's favourite comfort food Roast dinner Sunday best: nearly half of Britons say a roast is the best comfort food Rex In pictures: Britain's favourite comfort food Steak and chips Rex In pictures: Britain's favourite comfort food Scones with jam and clotted cream Creative Commons In pictures: Britain's favourite comfort food Apple crumble Rex In pictures: Britain's favourite comfort food Pizza Getty In pictures: Britain's favourite comfort food Classic lasagne Creative Commons In pictures: Britain's favourite comfort food Spaghetti bolognese Creative Commons In pictures: Britain's favourite comfort food Chocolate brownie Creative Commons In pictures: Britain's favourite comfort food Strawberry cheesecake Creative Commons In pictures: Britain's favourite comfort food Victoria sponge Creative Commons

The researchers calculated the cost of fraud by analysing the expenses and revenues of 73 UK food and drink companies listed on the stock exchange.

It found that only a tiny fraction of the fraud committed – about three per cent – actually gets detected. This is because, contrary to expectations, fraud is actually a “high-volume, low-value” activity – making it much harder to spot, says Mr Gee.