All aboard? Possible changes to country of origin food labelling in Australia

The Department of Industry, Innovation and Science (DIIS) is currently calling for submissions from food industry stakeholders in response to a consultation paper which has the potential to significantly change the framework governing food labelling requirements in Australia.

This update discusses possible changes to food regulation, including through the introduction of a requirement for labels which set out the proportion of ingredients sourced from Australia, or labels which incorporate an index of countries where key ingredients are sourced.  The update also comments on the potential effect of such changes on current safe harbour defences, the importance of education in the context and how best to deal with regulations for imported foods.

Food industry businesses should be alive to the potential for industry changes, and should consider responding to the DIIS paper before the 29 January 2016 deadline.

The motivation behind the DIIS consultation paper is a cited call from consumers for greater clarity around the origin of the foods they purchase.  This is in part a reaction to recent health scares arising from foods imported into Australia. The exercise is also intended to address concerns from consumers who wish to make informed purchasing decisions when considering the origin of their food.

The current Australian framework of food labelling regulations is governed by an interplay between distinct legislation and enforcement agencies at Commonwealth, state and territory levels. The practical effect of this framework is that there is neither clear and identifiable guidance nor regulation, often leading to confusion for consumers, or shortfalls in the country of origin claims actually put forward by food industry businesses.

In response to these deficiencies, the objective of DIIS’s initiative is to strengthen Australia’s country of origin labelling requirements by:

1. delivering to consumers more reliable, increased and less ambiguous origin information, particularly for food;
2. providing businesses with greater certainty and clarity about the claims they can make;
3. ensuring there are not undue costs to business; and
4. remaining consistent with Australia’s international trade obligations.

Of the main consumer concerns canvassed in the consultation paper, it is reported that Australian consumers particularly want to know at time of food product purchase the proportion of ingredients grown in Australia. The relatively vague regulations currently in force do not demand this  specific information.

Industry claims on food packaging often include statements such as ‘made in Australia’, ‘product of Australia’, ‘produced in Australia’, ‘grown in Australia’, ‘manufactured in Australia’, or otherwise incorporate the use of licensed or unlicensed logos depicting the Australian flag, Australian map, or Australian animals.  There is no governed consistency in the use of these statements or logos, and unsurprisingly, confusion is noted in the paper as a common occurrence.  In a world of increasing demand for visual indicators (such as with nutritional information requirements), inconsistent font size and positioning of country of origin information also adds to the confusion.

Such confusion is apparently not isolated to consumers. The paper notes that businesses are also impacted in circumstances where they may make ‘conservative claims because they don’t understand that they might be eligible for a stronger claim or because a stronger claim may be harder or more costly to prove.’

The consultation paper discusses the idea of displaying origin information by reference to a proportion of ingredients, including ways in which a consistent framework could be implemented.  What is clear, however, is that at this stage and without input from both consumers and businesses, there is no obvious solution which benefits all parties.

For example, consideration must be given to:

• how the proportion should be expressed (i.e. as an exact percentage or an average amount over time);
• how the information can be updated to take seasonally-demanded substitution of ingredients into account;  
• what the cost of including this information on products will be;
• whether visual indicators should be used, or simple text statements;
• how a consistent approach will be implemented; and 
• whether this requirement will apply to all food products

The paper also discusses the possibility of an alternative  requirement, where a list of ‘key’ ingredients is included on food labels which states the specific country  where each ingredient was grown.  However this raises some of the same concerns outlined above.  In addition, regard must be had to what would be considered a ‘key’ ingredient, and how the information would be clearly represented and still fit on a product label.

Also discussed are the current safe harbour defences, with particular attention on:

• the effect of more specific labelling requirements;
• whether, and to what extent, these new requirements would be applied to imported goods;
• the role of digital information in light of any new laws and regulations; and
• the importance of education and increasing awareness to reduce consumer and business confusion going forward.

The DIIS paper concludes with a proposed Commonwealth Government response to revise the country of origin labelling framework, recommending that changes involve:

1. for food that is made, produced or grown in Australia, a requirement that an “Australian made” kangaroo logo is displayed;
2. the requirement for Australian food businesses to display the proportion of the ingredients sourced in Australia in the form of a bar chart, supported by a text statement;
3. removing the 50 per cent production cost test, together with clarifying the substantial transformation test for food and non-food products; and
4. for imported food, a requirement that the country of origin statement is included in a box on the label and that food packed overseas indicates if the ingredients came from multiple origins.

What remains to be seen is how this proposed change will, or could affect the major stakeholders in the food industry, and in particular, food businesses.  The true test of any changes implemented will be whether a balance can be achieved between providing more information for Australian consumers and avoiding unduly increased costs or compliance requirements for businesses.

Although the paper cites a CHOICE survey, stating ‘when it comes down to the value consumers place on different aspects of food labelling, country of origin labelling is very important and second only to the actual ingredients contained in the food’, the true test may be whether the value of this information will outweigh any costs which could be passed on by businesses required to comply with the changing regulations.

DIIS is currently calling for responses from stakeholders to the consultation paper, with submissions open until 5pm AEST 29 January 2016.  The consultation paper is available for download on the DIIS website.