Reforms to the laws covering country of origin labelling (CoOL) for food were recently given the go ahead by Federal, State and Territory ministers. This comes after years of government consultation and reviews following criticism of the current CoOL laws by consumers, consumer advocates and various industry players alike.
The new system certainly means that country of origin labels are set to become much more specific for many foods, with the requirement that labels disclose how much of the food was made or grown in Australia. However, the Government made compromises to the system along the way so that whilst the new laws provide consumers with greater clarity in relation to country of origin food claims, the mandatory labelling requirements have been crafted in a way that won’t be overly burdensome for business.
It remains to be seen whether the reforms are as big a win for consumers as has been touted by the Government.
Background to reform
The frozen mixed berries scare in February 2015 saw renewed calls for reforms to the current CoOL framework to make origin claims on food labels clearer and more meaningful.
The current CoOL framework in Australia for food - being partly covered by the Australian New Zealand Food Standards Code (Food Standards Code), the Australian Consumer Law (ACL) and the Commerce (Trade Descriptions) Act 1905 (Cth) and the Commerce (Imports) Regulations 1940 (Cth) – has long been considered by many as not providing consumers with sufficient information about where their food comes from and country of origin claims have been accused by many of being misleading and confusing, especially the ‘Made in Australia’ claims.
Following extensive consultation with industry and consumers, the Government announced its proposed new CoOL system for food on 21 July 2015. In doing so, the Government acknowledged that consumers are interested in not just where a food is made or packaged but also how much of the food is grown in Australia. The CoOL reforms have been specifically designed to increase the information available to consumers when making purchasing decisions about their food, whilst recognising the need for this to be balanced with the cost to business.
On 31 March 2016, Federal, State and Territory ministers responsible for consumer affairs agreed to the Government’s proposed CoOL reforms.
The new system is introduced by way of a mandatory Information Standard under the ACL, setting out the new CoOL requirements for food offered for retail sale in Australia. It will commence on 1 July 2016 and will see the regulatory control of this area moving away from Food Standards Australia and New Zealand to the Australian Competition and Consumer Commission (ACCC). The new system will roll out over the next 2 years, with food manufacturing businesses having this transition period to sell current stock and change their labels to comply with the new laws. The new laws will take full effect on 1 July 2018.
The key change introduced by the Information Standard is that labels for most food that is grown, produced or made in Australia will need to include the ‘kangaroo in a triangle’ logo as well as a percentage bar chart and text statement to show the proportion of Australian ingredients.
With the Government opting to introduce a system which uses a percentage bar chart to indicate the proportion of Australian ingredients, food products which are made exclusively with Australian ingredients can be readily identified. However, the actual origin of food products made with imported ingredients will be less clear as it is not compulsory for the origin of those imported ingredients to be identified. This level of disclosure was raised as a possible option in the consultation process but was ultimately dropped by the Government as a compulsory requirement. Industry strongly expressed its concern that disclosing the non-Australian origins of ingredients would be too difficult and costly.
For consumers interested in knowing the origin of non-Australian ingredients in their food, the new regime may leave them in the dark about the actual origin of many of their food products and their key ingredients, unless the food manufacturing business chooses to offer this information. This may well be an issue that is raised again by consumer advocates when the system is reviewed in around 2 years.
Summary of key changes under the new Information Standard
Key changes introduced by the reforms include moving the mandatory CoOL requirements for food from the Food Standards Code into the ACL, introducing additional information requirements for ‘Made/Grown/Produced in Australia’ claims, and clarifying the existing safe harbour defence for country of origin claims.
‘Priority’ food vs ’non-priority’ food
The new Information Standard covers the same categories of food that are required to be labelled with country of origin under the Food Standards Code, so there is no change to the range of food that must be labelled with a country of origin.
However, the new Information Standard distinguishes between ‘priority’ foods and ‘non-priority’ foods and the exact labelling requirements differ depending on a food’s classification. There are mandatory additional information requirements (the kangaroo logo and bar chart described below) for ‘priority’ foods, with these being are optional for ‘non-priority’ foods. ‘Non-priority’ foods only require a text statement of origin on their labels.
‘Non-priority’ foods are seasonings, confectionery, biscuits and snack food, bottled water, soft drinks and sports drinks, tea and coffee, and alcoholic beverages.
All other food products are ‘priority’ foods, being the foods that the Government felt consumers have greater concern about in terms of their origin.
Different food origin claims
Priority foods that are produced, grown or made in Australia will be required to display a label (in a clearly defined box) with each of the following elements:
- a ‘kangaroo in a triangle’ logo to assist consumers identify the food’s Australian origin
- a bar chart shaded to visually show the proportion (by ingoing weight) of Australian ingredients present in the product
- explanatory text indicating that the food was grown, produced or made in Australia and the proportion of ingredients of Australian origin
Product of/Grown in Australia claim
This is a premium claim that all the ingredients are exclusively Australian and major processing occurred in Australia. Sample labels are:
Clcik here to view image
Made in Australia claim
Food can be labelled with this claim even if it does not contain all Australian ingredients provided it underwent its last substantial transformation in Australia. Under the current provisions in the ACL, a food is ‘substantially transformed’ in a country if the end product becomes fundamentally different from its ingredients. Imported ingredients which are subjected to minimal processing in Australia (eg freezing or reconstituting) will not be substantially transformed here. However, this concept is set to be refined as part of the new system to provide more clarity to business.
In addition to substantial transformation in Australia, currently the general country of origin defence in the ACL must also be met in order for this claim to be made. This requires that 50% or more of the total cost of producing the food must be attributable to production or manufacturing processes that occurred in Australia. The Government has flagged that it is proposing to remove this requirement from the ACL, with potential amendments to be made to the ‘safe harbour’ defences. It wants to clarify the meaning of ‘substantial transformation’ to bring the concept into line with local and international standards and also to remove the 50% production cost test which is often difficult for industry to comply with in practice. Further flow on amendments may also be required to the ACL’s mislabelling and recall provisions to take into account the CoOL reforms.
Where a product does not contain all Australian ingredients, the percentage of Australian ingredients must be shown on the bar chart and stated in text. It is only optional however for a label to indicate the origin of specific ingredients.
A sample label for a food produced, grown or made in Australia from at least 70% Australian ingredients:
Clcik here to view image
Packed in Australia claim
If this claim is used where only some of the ingredients are Australian, the label must include the bar chart and the text statement. The kangaroo logo cannot be used however as the food is not of Australian origin.
Where all of ingredients of the packaged food are non-Australian and originate exclusively from a single foreign country, the labelling must include (in a clearly defined box with a bar chart) a statement that the food was grown, produced or made in that country. If the ingredients originate from more than one country but are packed in Australia, it is not necessary to identify each country but it is necessary to say the food was grown, produced or made from imported ingredients. The label could describe the food as ‘Packed in Australia from imported ingredients’.
Sample labels are:
Clcik here to view image
Imported food claim
Imported products will continue to need to be labelled with a country of origin and will need to meet the new rules for ‘made in’ and ‘packed in’ claims. For ‘priority’ foods, importers will be required to make their country of origin claim in a clearly defined box on the label. They will not be allowed to use the kangaroo logo.
A sample label is:
Clcik here to view image
Seasonal ingredients claims
Alternative labels are available where the sources of ingredients vary. These labels will allow an average proportion of ingredients to be specified. The average will be calculated based on a 1 to 3 year period that concluded within the last 2 years. However, the label must provide a way for consumers to obtain more information on the proportion of Australian ingredients in the actual food.
A sample label is:
Clcik here to view image
When will the new labelling laws take effect?
The new labelling laws come into play on 1 July 2016. However, businesses have a 24 month transition period to sell their current stock and change their labels to comply with the new laws before they become mandatory on 1 July 2018. Current stock in trade will only be allowed to see out its use-by-date.
The Government has provided a number of resources to assist business with creating new compliant labels - a Style Guide to help with how new labels should look and be applied to food products, a CoOL label library where label parts can be downloaded and an online CoOL self-assessment tool to assist with selecting labels to use (available end of June 2016).
The Government has provided $4.2 million additional funding to the ACCC over the next 5 years to undertake compliance and enforcement activities in relation to the new labelling requirements. It has also promised a review of the new laws in 2 years’ time.
What does this mean for a food manufacturing business?
In the lead up to 1 July 2018, if you are a business which is a food producer or importer, you will need to:
- assess how the new CoOL requirements apply to your suite of food products, analysing the distinction between a ‘Made in Australia’ claim and a ‘Packed in Australia’ claim, bearing in mind that this may depend on the degree to which raw ingredients undergo a substantial change in Australia;
- obtain specific information about ingredients including those where there are seasonal variations in the country of supply, ensuring that average proportion claims are regularly reviewed and the source information that consumers are provided with is accurate and up-to-date;
- understand how the percentage bar needs to be calculated and how compound ingredients are viewed when calculating origin percentage, using the Government resources (online CoOL self-assessment tool) as a guide;
- consider how the ACL provisions on recall and reporting and managing mislabelling will apply to your business in practice given their difference from those currently in force under the Food Standards Code.