Food labelling law reform has seen a flurry of activity over the past few years, but while reforms are debated, the law itself remains in disarray. One of the most heavily contested areas is the requirement for country of origin labelling – a surprisingly complex and misunderstood area.

The most recent attempt at reform is a bill introduced by Senator Christine Milne, which would implement recommendations from the 2011 independent Review of Food Labelling Law and Policy to create a cohesive country of origin labelling policy for food under the Competition and Consumer Act 2010.

1. Food Labelling Law and Policy

As food labels have become more important to industry, consumers and the government in the past few years, competition for control over the limited space available has only intensified. As the government adjusts to consumer demands and international trends, regulation of what appears on labels has evolved erratically and the relevant laws have grown in complexity, causing confusion and increased compliance costs.

One aspect that has had particular attention in the past few years is country of origin, the focus of much lobbying and political posturing and the subject of a bill currently in the Senate, the Competition and Consumer Amendment (Australian Country of Origin Food Labelling) Bill 2013.

Particularly important is the confusing state of “Made in Australia” claims. Critics argue that the country of origin law is too complex for consumers to understand, too difficult to comply with and that it allows “Made in Australia” claims to be made even when the underlying product is not Australian, putting local farmers and growers at a stark disadvantage to importers.

2. Assessing Country of Origin Claims

Country of origin requirements for food labels can be found in the Food Standards Code (Code), the Commerce (Trade Descriptions) Act 1905 and the Commerce (Imports) Regulations 1940 (Regulations), and the Australian Consumer Law (ACL) (schedule 2 of the Competition and Consumer Act 2010 (CCA)).

The Code and the Regulations require packaged and particular unpackaged foods (especially imported foods) to have labels that denote country of origin1, but it is the primarily the ACL that adds a much-maligned layer of complexity.

The ACL does not include country of origin obligations specifically for food labels. Instead, the prohibitions in the ACL apply to food as much as they apply to any other goods. The ACL prohibits a person from engaging in misleading or deceptive conduct (s 18); making false or misleading representations that a good has had a particular history (s 29(a)); or making false or misleading representations concerning the place of origin of goods (s 29(k)).

The Safe Harbour

Nevertheless, the ACL does give some guidance to producers, by carving out a “safe harbour” at s 255. Under the safe harbour, a representation as to the country of origin of goods (such as “Made in Australia”) will not be considered misleading so long as:

  1. the goods have undergone a “substantial transformation” in that country

    (a substantial transformation occurs when the goods undergo a “fundamental change in form, appearance or nature” so that the goods after the transformation are new and different to those existing before); and

  2. 50% or more of the cost of production is attributable to processes that occurred in that country

    (the mathematical calculations to ascertain “cost of production” are contained in s 256; these requirements are complex, but in general they include the costs of materials labour and overheads).

The safe harbour provisions also impose stricter requirements for “Product of…” and “Grown in…” claims, and allows claims about the origin of particular ingredients (such as “Made with Australian Peanuts”).

From a consumer standpoint, the terms “Made in Australia”, “Product of Australia” and “Grown in Australia” sound similar, but their technical meanings are considerably different. Confusion can easily arise about “Made in…” claims where the food comes from abroad but the safe harbour requirements are met in Australia. For example, it is possible for pork sausages manufactured in Australia from imported pork to use the term “Made in Australia”, so long as substantial transformation and production occurs in Australia.

3. The Push for Reform

Prompted by the lack of clarity in various areas of food labelling law, an independent panel (the Panel) was established to review food labelling law and policy. The Panel presented its final report on 28 January 2011, Labelling Logic, the Review of Food Labelling Law and Policy (Labelling Logic).2

Among other recommendations, the Panel recommended amending the country of origin rules by:

  • moving the country of origin rules from the Code to the CCA (Recommendation 41); and
  • treating food-related country of origin claims differently, by basing the “safe harbour” for these claims on the weight of goods (excluding water) rather than costs of production (Recommendation 42).

According to the Panel, Recommendation 42 focuses the safe harbour on where the food itself came from, as opposed to where it was packed or prepared. This would be more in line with consumer expectations, avoiding confusion about “Made in Australia” claims.

These recommendations seemed to reach their end when the Australia and New Zealand Food Regulation Ministerial Council disagreed with them in its official Response, declining to implement any change to the country of origin rules.3  Nonetheless, the calls for reform were revived in 2012, when the Senate Committee on Australia’s Food Processing Sector (the Senate Committee) released its 258 page Inquiry Into Australia’s Food Processing Sector (the Inquiry). Among other various proposals, the Senate Committee echoed the Panel’s recommendations about country of origin claims.4

4. The Competition and Consumer Amendment (Australian Country of Origin Food Labelling) Bill 2013 (Cth)

Following the rejection of the Panel’s recommendations, Senator Christine Milne and her colleague Adam Bandt MP introduced bills into the Senate and the House of Representatives, attempting to reinstate Recommendations 41 and 42.5  Those bills have since been abandoned.6

On 16 May 2013, Senator Milne introduced a second attempt at reform, the Competition and Consumer Amendment (Australian Country of Origin Food Labelling) Bill 2013 (Cth) (the Bill). The Bill includes new country of origin requirements in the CCA per Recommendation 41, but it differed from the earlier bill by no longer including the “weight of the goods” rule per Recommendation 42.

The Bill outlines a new Part 3-4A in the CCA for food-specific country of origin claims, which overrides overlapping requirements in the Code. Under Part 3-4A, one of the following country of origin claims must be used for packaged and certain unpackaged foods:

  • Product / Produce of Australia a premium claim for packaged food wholly manufactured or processed in Australia, where all the significant ingredients are grown in Australia;
  • Australian Manufactured / Manufactured in Australia for packaged food “substantially transformed” in Australia, where at least 50% of the total cost of processing is incurred in Australia (instead of “Made in Australia” as the safe harbour allows);
  • Packaged in Australia for packaged food (but not, for example, “Packaged in Australia from local and imported ingredients”);

Similar to the s 255 ACL safe harbour, the Bill would allow significant ingredients to be labelled with an Australian origin, and would also allow “Grown in Australia” to be used in connection with certain unpackaged foods.

Finally, and significantly, the Bill creates an offence for failing to comply with the labelling requirements, with criminal penalties of $250,000 for bodies corporate and $50,000 for individuals.

What does the Bill mean?

Senator Milne’s Bill is a much more considered step in the direction of reform compared to a number of previous attempts.7  While the Bill has been limited to only implementing one of the Panel’s Recommendations, that Recommendation has been further endorsed by the Senate Committee, and moving the country of origin requirements from the Food Standards Code to the CCA would remove at least one layer of complexity from the  country of origin rules. One significant aspect of the Panel’s recommendations that the Bill does not address is the need for a robust education campaign, an obligation that both government and industry have called on the other to perform.

Difficulties still lie in the fact that not much is done about the confusion surrounding what various country of origin labels actually mean. The vaguest of claims, “Made in…” has been removed from the table, but what remains still allows a degree of variability. “Produced in…”, “Manufactured in…”, “Packaged in…”  and “Grown in…” can still be interchangeable in the consumer’s eyes. Furthermore, the difficult safe harbour test still applies in the case of “Manufactured in Australia”. For producers, justifying a claim on the basis of this test can often be a costly activity.

5. Conclusion

The country of origin reforms remain a part of the broader food labelling reforms recommended by the Panel and further investigated by a number of government inquiries and proposals.8

Country of origin claims will continue to be a battleground, as government attempts to balance consumer welfare and industry requirements for autonomy with the impact upon local growers and the local manufacturing sector. Senator Milne’s Bill is just the most recent in a flurry of reform attempts, but if passed, this Bill would bring a small amount of clarity to the law surrounding country of origin claims.