A bill to replace the Food Act 1981 (Food Act) is currently being considered by Parliament. The Food Bill (Bill) was scrutinised by the Primary Production Select Committee (Select Committee).
If passed in its current form, the Bill would have severe and far-reaching consequences for food manufacturers, exporters, and the wider food industry in general.
This FYI analyses two reforms, and the problems with them.
We will focus on the following reforms:
- requirements for food intended for export to comply with New Zealand law; and
- new offences and higher penalties.
Where Are We Now?
The Bill was introduced in May last year by the Minister for Food Safety, after which the Select Committee invited public submissions. The food industry, including the New Zealand Food and Grocery Council (FGC), made submissions on provisions in the Bill that raised serious concerns.
The Select Committee's report was released on 16 December 2010, and does not deal with serious concerns raised by the FGC.
The Bill is currently before Parliament. As the Bill was proposed and is supported by the Government, it will likely pass in its current form.
Food Intended for Export
What the Bill proposes
The Bill proposes a regime that would apply to all food produced in New Zealand, regardless of whether the food is intended for the domestic market or export. This would mean that an exporter of food (except to Australia) would have to comply with New Zealand food manufacturing and labelling requirements. Exporters would be able to apply for exemptions for specific foods and/or markets.
Currently, exporters can rely on compliance with the legal requirements of the country to which they are exporting food.
There are four main problems:
- a further layer of regulation is unnecessary;
- food may become non-compliant with the legal requirements of the country to which it is being exported;
- the cost of exemptions; and
- the regime is inconsistent with other proposed legislation.
Regulatory intervention should be introduced only if it is needed. There is nothing wrong with the current regime under the Food Act. An exporter should be able to rely on their compliance with the requirements of the country that they are exporting to. The majority of food exporters spend a lot of time, effort, and money ensuring this compliance. Another layer of regulation, including a costly exemption process, is unnecessary.
In many circumstances, if the exporter were to comply with New Zealand food law, the food would be non-compliant with the legal requirements of the country to which it is being exported. This raises serious concerns that strict compliance with New Zealand law will result in products being rejected in international markets due to non-compliance with regulations in those export markets.
The FGC submission to the Select Committee uses the example of beer produced and bottled in New Zealand that is exported to the United Kingdom. Currently, the manufacturer/exporter will label the beer to comply with United Kingdom labelling requirements. If the Bill is passed in its current form, the beer would have to comply with New Zealand labelling requirements. The problem is that labelling requirements in the United Kingdom and New Zealand are inconsistent. So labelling the beer as required by the Bill would mean that the beer could not be legally sold in the United Kingdom.
The Bill will lead to a flood of applications for exemptions - an unnecessary, cumbersome, and expensive process. Exemptions for specific food products and specific export markets would add an unneeded hurdle for all food exporters. If we consider similar exemption type procedures in other regulations, such as the novel food provisions in the Australia New Zealand Food Standards Code (Joint Code), it is clear that the exemption process will be cumbersome. The end result will be a stifling of New Zealand's food export industry.
An alternative to the regime proposed by the Bill would be to limit regulation to hygiene issues for food that is produced solely for export. A further alternative would be for exported food to meet the requirements of the country that it is exported to, and put the onus back on the regulator to identify and declare foods of concern that must meet New Zealand food law requirements when exported.
The reform proposed by the Bill is inconsistent with reform in other areas of food regulation. In March last year, the Ministry of Health released a consultation paper for a proposed Natural Health Products Bill (NHP Bill) to replace the Dietary Supplements Regulations 1985 (DSRs). Dietary supplements are a food, and the DSRs are regulations under the Food Act. The NHP Bill would make exporters responsible for ensuring that exported products meet the standards of the importing country. Why is the same approach not taken for all food intended for export in the Bill?
Offences and Penalties
The Bill also proposes various new offences. These include, for example, offences involving publishing non-complying advertisements. A number of these suggested offences are already covered by the Fair Trading Act 1986 and enforced by the Commerce Commission and the Advertising Standards Authority. While these proposed offences duplicate existing provisions, the fines exceed those already in force for Fair Trading Act breaches, without any justification.
Under the Food Act, the maximum fine for individuals is $5,000, and a body corporate $20,000. The Bill proposes that these maximum fines will increase to $100,000 for individuals, and range up to $500,000 for a body corporate. The problem with fines this big is that, as identified in the FGC submission, in a country largely made up of small to medium sized enterprises, the level of these fines will most likely be destructive rather than punitive.
There are also many manufacturers who would technically be in breach of the Bill if it passed. The Joint Code is complex, ambiguous, and contradictory at times. Therefore, in certain cases, whether a food manufacturer is in breach is open to debate. The concern is that the regulator will now have powers to seek large fines for these technical breaches.
We are concerned with the practical consequences the Bill will have on the food industry, and New Zealand's critical export market, if passed in its current form. The Bill will mean that exporters, who currently comply with the market that they are exporting to, will have to comply with the Bill - even if this makes them non-compliant with their export market.
The Bill is an attempt to modernise New Zealand food law, and ensure its efficient and consistent application. However, the existing laws over food intended for export work effectively to maintain the New Zealand food industry's reputation of producing high quality and safe food. Any change to these laws should provide a helping hand - and not a hindrance - to this vital export industry.
The Bill will also introduce large fines that will apply even in cases of technical breaches of complex and, at times, ambiguous and contradictory laws.
If you are concerned, as we are, with the reforms discussed in this FYI, it is important to help out by voicing your concerns to your local MP.