By Joe Lederman In late 2009, numerous politicians in the Federal Senate and the New South Wales Parliament were making newsworthy statements or passing new laws to ensure that there would be greater “truth” in food labelling. This article examines some of the key issues, and considers who has been advocating the particular changes and where all this sits in the context of the proposed review of food labelling currently being undertaken under Policy Statement Guidelines issued by the Australia and New Zealand Food Regulation Ministerial Council. ‘Truth in labelling’ might possibly be an expression of concerns about information on a food product label misleading purchasers because relevant facts required to make an informed purchase are missing. The concerns that food labels contain inaccurate information have been expressed in a number of contexts notwithstanding that a considerable amount of information is actually provided to consumers on food labels in accordance with numerous requirements contained in the Australia New Zealand Food Standards Code. For example, in certain circumstances the Food Standards Code makes it mandatory that a label for a food product declare (amongst other things): · the ingredients and additives used in a food (see Standard 1.2.4) · nutritional information (see Standard 1.2.8) · vitamins and minerals compositional information (see Standard 1.3.2) · certain allergenic ingredients such as milk, peanuts, and soybeans (see Standard 1.2.3) · whether any genetically modified ingredients are in the food (see Standard 1.5.2); and · the country of origin of the food (see Standard 1.2.11) However, surveys have indicated that the country of origin is considered by many consumers to be an important factor in choosing to buy a particular product and “country of origin” labelling is one area where the current requirements are very contentious as outlined below. Proposed Senate changes seek to identify Palm Oil products and seek to refine Country of Origin claims At the Commonwealth level, the Federal Senate has recently reviewed at least two Bills, one which was designed to make it mandatory to declare on the label when Palm Oil was used in the food product (the Food Standards Amendment (Truth in Labelling—Palm Oil) Bill 2009) and the Food Standards Amendment (Truth in Labelling Laws) Bill 2009 which calls for more comprehensive and more accurate information regarding the country of origin of food products. Inferences drawn from Country of Origin claims Country of origin claims are important to consumers because certain characteristics, such as quality or safety, can be imputed into a food simply because it is from a given country. For example, the level of safety attributed to Australian beef is reputedly higher than that attributed to beef sourced from countries that have had issues surrounding Bovine Spongiform Encephalitis (BSE or ‘Mad Cow Disease’) or Foot and Mouth Disease. Similarly, just over a year ago, virtually any dairy product made in China was considered a very real safety risk compared to that from, for example, the EU or New Zealand due to systemic practices in China's dairy industry that resulted in melamine contamination. There are also consumers who, when there is a choice available, would prefer to buy Australian products out of a sense of patriotism or to support, in some small way, the livelihoods of Australian producers, manufacturers, their workers and communities. Concerns regarding Country of Origin claims During hearings of the Economics Legislation Committee Inquiry into the Food Standards Amendment (Truth in Labelling Laws) Bill 2009 (“the Inquiry”) on 30 October 2009, some Senators, along with some of the organisations making submissions, claimed that there was a price premium that attaches to a product’s origin which acts as an incentive for importers, manufacturers, retailers and marketers to either complicate or oversimplify their country of origin claims and confuse consumers. Moreover, it was said that the current legal labelling requirements in Australia in relation to Country of Origin claims actively facilitates confusion and misconceptions, making it both simple and lawful to make ‘opaque’ or disingenuous country of origin claims. Current law regarding Country of Origin claims Under the Australia New Zealand Food Standards Code Standard 1.2.11, all packaged food labels must include: · A statement on the package that identifies where the food was made or produced; or · A statement on the package that identifies: · the country where the food was made, manufactured or packaged for retail sale; and · to the effect that the food is constituted from ingredients imported into that country or from local or imported ingredients as the case may be. While there is no specific format in the Food Standards Code as to the way a Country of Origin statement must follow, the Trade Practices Act 1974 (Cth) (“the TPA”) – which is a law under which country of origin labelling violations can be prosecuted - spells out possibilities that are considered legally acceptable. Furthermore, the TPA actually creates what are termed ‘safe harbours’ that provide a statutory defence to any food company or retailer that faces a prosecution for misleading and deceptive conduct under either Sections 52, 53(a) & 53(eb) and 75AZC1(1)(a) and (i) of the TPA relating to a Country of Origin claim. The “safe harbours” arise principally from Section 65AB of the Trade Practices Act that allows a corporation to represent a country as the origin of goods where those goods have been substantially transformed in that country and 50% or more of the cost of producing and or manufacturing the goods is attributable to production or manufacturing processes that occurred in that country. This is known as the ‘substantial transformation test’. Section 65AE outlines that ‘substantial transformation is a fundamental change…in the form, appearance or nature such that the goods existing after the change are new and different goods from those existing before the change’. The Australian Competition and Consumer Commission (“the ACCC”), the body generally responsible for prosecuting misrepresentations as to Country of Origin, has published examples of what does and does not constitute a substantial transformation of food products. For example, the ACCC has accepted that ‘mere…processing such as repackaging or mere assembly of an otherwise imported good is unlikely to qualify for the 'Made in …' legal defence. The ACCC also states that ‘there is arguably a substantial transformation when pork becomes ham’. How the law currently shapes Country of Origin claims However, the law has naturally shaped the way in which country of origin claims can be made. For example, due to the legal defence available under Section 65AE of the TPA, a corporation may import food ingredients and packaging, blend the goods with, for instance, 5% Australian content (by measure of compositional ingredients), and sell those goods as ‘Australian Made’ and ‘Made in Australia from imported and local ingredients.’ This is provided, of course, that the food is transformed in accordance with Section 65AE of the TPA and 50% of the costs incurred in the production or manufacturing of that food have occurred in, for example, Australia. In this manner, the transformed product does not fully disclose on its label the actual origin of the ingredients in the imported food. For example, an importer of Brazilian orange juice concentrate could add Australian water and a small amount of fresh Australian orange juice and if Section 65AE of the TPA was satisfied, the label of that juice could state ‘Made in Australia from imported and local ingredients.’ Furthermore the actual compliant statement ‘Made in Australia from imported and local ingredients’ could be in small font, placed on the back of the package while a ‘stylised’ logo could appear on the front of the pack stating ‘All of our juice is Proudly Australian Made’. Accordingly, a consumer would not be in a position to know actual country of origin of the orange juice concentrate, nor the proportion of Brazilian or Australian juice present in the product. Furthermore as indicated by the example above, the consumer could also be given the clear impression that the juice in fact comes from Australian oranges. Some of the submissions made by producer groups and consumer groups to the Inquiry pointed out that a large proportion of consumers are unaware that a product labelled ‘Made in Australia’ can, under the TPA safe harbour legal defence, include mostly imported ingredients. The proposed amendments for truth in labelling It was to address these ‘ambiguities’ discussed above that a Bill was introduced in the Senate. In relation to Country of Origin statements, the Bill seeks to ensure that producers, manufacturers and distributors of food: (a) may only use the word “Australian” on or in relation to the relevant food if it is 100% produced in Australia; and (b) in the case of food containing one or more imported ingredients…must display the inclusion in the food of imported ingredients …on the front label of the relevant food. The 100% threshold before using the word Australian in relation to food An overwhelming number of submissions to a recent Senate Inquiry into these issues stated that the ‘100% produced in Australia’ requirement before a product could use the word ‘Australian’ would be unworkable, and would in fact, preclude Australian products from being labelled as such. The Committee heard that certain, albeit minor, ingredients in foods can only be sourced (in commercial quantities) from overseas. Pepper was used as an example of one such ingredient. The provision would deem every product using pepper, irrespective of the Australian origin of the remaining 99.5% of that product, as unable to use the word ‘Australian’ in relation to that food. Similarly any product containing cocoa, coffee and imported food additives would be in a similar position. This would be untenable, and to the detriment of Australian producers and manufacturers. There were other issues brought to the attention of the Senate Committee regarding this section of the Bill including the fact that only the word ‘Australian’ is affected . As a result, manufacturers would be able to maintain a ‘Made in Australia’ claim for imported products meeting the TPA section 65AB test. Ultimately the Committee conceded that such proposed provisions could be unworkable in its current form and would need to undergo amendment. The labelling of imported ingredients The Senate Committee also heard from consumer groups and producer groups advocating the inclusion of a readily understandable pie or bar chart representing the amount of both imported and Australian components of the food product. Groups advocating on behalf of industry pointed out the costs of relabeling products and the vagaries in the sourcing of Australian and imported ingredients at any given time would make this exercise very difficult. Aside from the cost issue, the main argument advanced by industry was the inability to predict accurately where ingredients are sourced at any given time and the practical difficulty of inevitable inaccuracies in the labelling of country of origin that would result. Industry groups pointed out that seasonality and other supplier constraints at times forced companies to substitute imported ingredients for those that in the ordinary course of business would be otherwise sourced locally. After the arguments from the various stakeholders, the Senate Committee appeared in favour of a graphical representation of imported and Australian ingredients on front of label. Equally apparent was the opposition to change and support of the status quo by manufacturers and retailers and the industry bodies that represent them (for example, the Australian Food and Grocery Council). Most submissions to the Senate Committee agreed that the current system relating to Country of Origin claims was open to abuse and deliberate or incidental obfuscation. One of the terms of reference of the ‘Review of Food Labelling Law and Policy’ includes the very broad objective to ‘make recommendations to improve food labelling law and policy.’ The Ministerial Council had received more than 5500 submissions by the initial closing date of 20 November 2009. The Ministerial Council has undertaken to release a discussion paper pubicly into the issues in early 2010, followed by a ‘lengthy period of public consultation including public consultation meetings’ along with an opportunity for further written submissions. Thanks in part by the Senate Committee Inquiry regarding country of origin claims, is likely that this issue will remain a serious issue for additional review. FoodLegal Bulletin will continue to update subscribers on the progress of the review. Other NSW Legislative changes for “Truth in Beef Labelling” The NSW Parliament, on 20 August 2009, passed the Food Amendment (Beef Labelling) Act to amend the Food Act 2003 (NSW) to make it mandatory that poorer quality cuts of beef be labelled as such. Prior to the amendment of the Act, beef meat that came from an animal with eight incisor teeth (which are generally animals older than three and a half years) was not required to be labelled in any particular manner, unless the producers or retailer wished to do so voluntarily, in which case they were only required to label the meat as ‘budget’ cuts – e.g. “budget porterhouse”. However, various farmer groups and consumer groups argued the term ‘budget’ used in particular by supermarkets to describe such meat did not convey all of the relevant information necessary for purchasers to make a fully informed purchase about the type of beef they were buying. Accordingly, the legislative amendment, and in particular Section 23B, the Food Act 2003 (NSW) now requires that NSW retailers must inform consumers that products advertised or sold as budget cuts of beef are of ‘low quality.’ (Section 23B(1)(c)).
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