On 1 July 2016, a new regime relating to country of origin (COO) labelling for unpackaged and packaged foods will come into operation.
The regime will include new definitions for COO labelling and new mandatory requirements to reflect whether a product was made, produced, grown and/or packaged in Australia.
A grace period of 2 years (1 July 2018) will apply before the new regime is enforceable as an “information standard” under the Australian Consumer Law (ACL).
What is the current state of play?
Currently, the Australian New Zealand Food Standards Code (Code) regulates which foods require a COO statement on their labels.
If you make a claim about the COO of your food product that is false or misleading, such conduct may constitute a breach of the ACL which in turn may give rise to penalties, damages and other remedies.
The ACL provides a series of “safe harbours” relating to the claims “made”, “produced” or “grown” in a particular country. If the relevant criteria are met, your COO representations will not be taken to be false or misleading. While companies have endeavoured to ensure their labelling satisfies the “safe harbour” criteria, feedback on the current law indicates that there is uncertainty about the application of the criteria and consumers are unclear what the COO representations actually mean.
What is the new COO labelling regime?
What foods are caught?
The new regime will apply to all foods that are currently required to be labelled with COO under the Code – namely all foods offered for retail sale in Australia. Non-priority foods (including seasonings, confectionary, biscuits and snack food, bottled water, soft drinks and sports drinks, tea and coffee and alcoholic beverages) will only require a text statement of origin on their labels.
All other food products (i.e. priority foods) must feature a prescribed logo, bar chart and specific text in a box (as per below).
What are the new requirements?
The key requirements of the new regime include:
- new mandatory labels, including the green and gold kangaroo logo, bar charts and words indicating the proportion of Australian ingredients used by weight; and
- clarification regarding how COO descriptors can be used.
The requirements of the mandatory labels are different based on whether the product is ‘grown in’, ‘produced in’ or ‘made in’ Australia.
‘Grown in’ and ‘produced in’ Australia
‘Grown in’ and ‘produced in’ Australia can only be used if all of the ingredients are Australian and major processing occurs in Australia. This is a stricter requirement than the current regime which only requires a significant proportion of ingredients/components to be Australian.
The words ‘Grown in Australia’ or ‘Produced in Australia’ must be accompanied by a bar chart indicating that 100% of ingredients are Australian.
‘Made in’ Australia
‘Made in’ Australia can only be used if the food undergoes its last substantial transformation in Australia. The current ‘substantial transformation’ test is retained but it is now irrelevant whether 50% or more of the total costs to produce or manufacture the goods occurred in Australia.
The words ‘Made in Australia’ must be accompanied by a bar chart and statement indicating the percentage of the ingredients that are Australian.
Different labelling options are available where the Australian content of the product varies between seasons or based on availability. Businesses can refer to a ‘seasonal average’ of Australian ingredients and direct people either online or over the phone for more information on the proportion of Australian ingredients in the actual food they want to buy or have bought. For example: ‘Made in Australia – ingredients sources vary – average 60% Australian ingredients – visit www.variableoriginfood.com for details’.
‘Packed in’ Australia
Products that have been packed in Australia must clearly state where the food was grown, produced or made. ‘Packed in Australia’ products will not include the logo, as the food is not of Australian origin. If the product contains Australian ingredients, a bar chart and statement can be used to indicate the percentage of the ingredients that are Australian.
Click here to view the table.
Is the new regime any better than the old?
The new regime may still cause uncertainty (and could be onerous) where the source of ingredients for food products change seasonally or based on availability.
For example, if percentages of ingredients change because of a different source this may not be appropriately reflected on the product label. Additionally, the proportion of Australian ingredients in the actual product will need to be disclosed elsewhere, which may require constant monitoring and updating.
Businesses will need to project forward as to the procurement strategy for their food products and how this may affect the COO labelling under the new regime.
What are the consequences of breaching the new regime?
Similar to current circumstances, the regulator or any other party can commence proceedings for alleged breaches of the ACL and seek pecuniary penalties, damages or injunctions.
What you should do now
If you have not done so already, you should:
- review your food products to ascertain where the ingredients originate and the percentage of ingredients from certain sources;
- understand the specifications for the new COO labels to be included in the next packaging order;
- take this 24 month window of opportunity to conduct a thorough review of all marketing claims on all packaging particularly in light of the ACCC’s current enforcement focus on food and health claims.