In issue 6 of Cultivate, we discussed food labelling and advertising laws in Australia. In October 2014 the Australian Commonwealth Parliament House of Representatives Standing Committee on Agriculture and Industry reported on its inquiry into country of origin labelling for food (Report). The Report recommended a number of changes to the existing country of origin (COO) food labelling regulations in Australia which are yet to be implemented.
In February 2015 COO food labelling received widespread attention in Australia when a brand of frozen mixed berries was recalled following an alleged link with a Hepatitis A outbreak. The product’s packaging carried the label ‘Made from local and imported ingredients’ and ‘Packaged in Australia’. The large majority of the berries were in fact imported from China and Chile, prompting calls for the Australian Government to reexamine COO food labelling laws.
In late February, the Prime Minister announced that proposals for COO labelling reform would be released by the end of March 2015. This deadline has been extended until August 2015 to permit consultation with food industry stakeholders and further consumer research. The first of those consultations occurred at a roundtable meeting in Sydney in early April. We anticipate that the new regime will be in place by the end of this year.
The Australia New Zealand Food Standards Code (Code) regulates which foods must have a country of origin statement on their labels. The Australian Consumer Law (ACL) also contains a number of provisions that regulate COO claims. The starting point of the ACL is that labels cannot be false, misleading or deceptive. In order to reduce complexity, uncertainty and regulatory burden for businesses, the ACL provides that certain COO descriptors will not be false, misleading or deceptive where specific ‘safe harbour’ defences are satisfied.
The ACL establishes criteria that must be satisfied to establish the safe harbour defences :
- Claims that goods are ‘produced in’ or are the ‘product of’ a particular country: the specified country must be the country of origin for each significant ingredient or component of the good, and all, or virtually all, of the processes involved in production happened in that country.
- Claims that goods or certain ingredients are ‘grown in’ a particular country: each significant ingredient of the good was grown in the specified country and all, or virtually all, processes involved in the production or manufacture happened in that country.
- Claims that a product is ‘made in’ a particular country: the product must be substantially transformed in the country of origin being claimed, and 50 per cent or more of the total costs to produce or manufacture the product must have been incurred in that country.
Recommendations contained in the Report
The Report contained a number of recommendations in relation to COO labelling laws. These included:
- The implementation of the following (new) COO safe harbours:
- ‘Grown in’ – 100 per cent content from the specified country
- ‘Product of’ – 90 per cent content from the specified country
- ‘Made in [country] from [country] ingredients’ – 90 per cent content from the specified country
- ‘Made in [country] from mostly local ingredients’ – more than 50 per cent Australian content
- ‘Made in [country] from mostly imported ingredients – less than 50 per cent Australian content.
- Amending the Code to prescribe that COO label text be increased in size compared with surrounding text on a product label.
- The introduction of a visual descriptor reflecting the safe harbour thresholds of Australian ingredients in the content of a product.
- Investigating the use of bar code technology in the presentation of product information for consumers, with a view to implementing a voluntary system for producers and manufacturers.
Recommendations outlined by Minister MacFarlane
In a number of recent media interviews, the Minister for Industry and Science, Ian Macfarlane, has outlined the proposals currently under consideration by the Australian Government which are being market tested with consumers. These proposals appear broadly in-line with the proposals set out in the Report. The proposals centre on the introduction of a graduated lineal symbol accompanied by text. Both the symbol and text will indicate the percentage of Australian content in gradations, such as ‘containing 100 per cent Australian content’, or ‘over 50 per cent Australian content’, or ‘less than 50 per cent Australian content’ (reflecting the proposed new safe harbour thresholds). The Minister has also suggested that the words indicating the percentage of Australian content will be at least 30 per cent larger than surrounding text.
Minister Macfarlane has also indicated that one of the options being explored under the current proposal is the use of technology, including apps which might be downloaded to smart phones and other devices, which would facilitate the provision of additional information to consumers without overly complicating product labelling.
Issues to consider
The Report noted that the existing COO labelling regime is confusing for consumers. The Report also noted that the phrase ‘Made in Australia’ was a significant source of that confusion, particularly where that label is combined with the cover-all label ‘from local and imported ingredients’.
That descriptor is most commonly employed to allow for changes in the availability of ingredients, particularly due to the seasonality of fruit and vegetables. However as that claim fails to identify the percentage of local content or the relative roles the imported and local contents play in the final product, the Australian Competition and Consumer Commission (ACCC) has noted that this form of claim is the subject of frequent consumer complaints that the term is misleading. The proposal to require the ‘Made in Australia’ label to specify the COO of ingredients in percentage gradations is clearly aimed at addressing this issue.
However, while specifying the COO of ingredients in percentage gradations may reduce the amount of confusion among consumers, it will also impose further costs on manufacturers who may be required to amend product labels whenever the proportion of local ingredients substantially changes as a result of seasonal or other supply factors.
An alternative option would be to make information regarding the COO of food products available through the use of bar code reading technology or other apps (as suggested in the Report). This would allow the provision of detailed information to consumers which could be easily updated by manufacturers at minimal expense, as it would not require the alteration of labelling on product packaging.
Perhaps a more straightforward means of addressing consumer confusion would be to dispense with the ‘Made In’ label entirely and replace it with the label ‘Manufactured In’ for food products that have been substantially transformed in a particular country. This is because much of the confusion on the part of consumers relates to the use of the term ‘Made In’ itself. When applied to food products, many consumers assume that the words ‘Made In’ mean that the ingredients were grown in a particular country. Substituting the words ‘manufactured in’ would help resolve this ambiguity as that phrase more clearly refers to the country where the product was manufactured as opposed to the COO of the ingredients.