10 May, 2016
In brief
It is currently mandatory that all food for retail sale in Australia contains a country of origin statement. In response to consumer feedback that the current country of origin labelling requirements are confusing and unhelpful, and after many years of government consultation and reviews, new requirements for labelling of most food products for sale in Australia have been introduced under the Country of Origin Food Labelling Information Standard 2016 (the Standard)1 which will come into effect from 1 July 2016.
What are the current requirements?
Currently, the country of origin labelling requirements for food items is mandated under Australia New Zealand Food Standards Code 1.2.11 (Food Standards Code). Under the Food Standards Code, it is presently mandatory to include a country of origin statement on most food items for retail sale and to specifically identify:
- the country or countries of origin where the food was made, produced or grown, and
- that the food is a mix of either (i) local and imported ingredients or (ii) imported ingredients.
What are the key similarities with the current system?
The Standard sees the continuation of the mandatory country of origin labelling requirement, but implies much stricter requirements for the labelling that must be attached to the item or displayed at the point of sale.
Aligned with the current system, the Standard does not require country of origin labelling for food products that are:
- sold to the public for immediate consumption by restaurants, schools, a caterer or self-catering institution, prisons, hospitals or a medical institutions,
- made and packaged on the premises where they are sold or delivered (for example, bakeries),
- delivered, packaged and ready for consumption, as ordered by the consumer, other than sold from a vending machine (for example, home delivered pizza),
- sold at fundraisers, and
- for special medical purposes.
What are the new country of origin food labelling requirements?
The exact labelling requirements under the Standard differ depending on whether the food is classified as a ‘priority’ or ‘non-priority’ product. The Standard identifies ‘priority’ foods as falling into the following three categories:
- packaged food, other than fresh fruit and vegetables in transparent packages,
- fresh fruit and vegetables in transparent packaging, and
- unpackaged meat, fish, fruit and vegetables.
Priority foods that are ‘grown’, ‘produced’ or ‘made’ in Australia will be required to display a label with:
a kangaroo logo to assist consumers easily identify the food’s Australian origin,
a bar chart to provide a visual indication of the minimum percentage, by ingoing weight, of the food’s Australian content, and
explanatory text that states the food was grown, produced or made in Australia and the proportion of ingredients of Australian origin.
Food may be described as ‘grown’ or ‘produced’ in a country only if most of its content is from, and virtually all of the processing is undertaken, in that country.
Food may be described as ‘made’ in a country if it underwent its last substantial transformation in that country. Goods are ‘substantially transformed’ if they undergo a fundamental change in form, appearance or nature such that the goods are new and different.2
Labelling requirements for priority foods that are ‘packed’ in Australia will vary depending on whether the source of the ingredients is from one or more countries. For example, butter made from imported milk could claim to be ‘Made in Australia’, however imported butter that is packaged into 375g resealable tubs for resale in Australia cannot make such a claim, and is not permitted to carry the kangaroo logo as the food is not of Australian origin.
All imported priority foods produced, made or grown in an overseas country, must have a country of origin statement in a clearly defined box. The Standard does not impose labelling requirements for foods intended for export.3
The Standard also identifies ‘non-priority’ food products for which the new country of origin labelling requirements are only optional. However, at a minimum the following goods must state the country of origin of the goods:
- seasonings,
- confectionery,
- biscuits and snack food,
- bottled water,
- soft drinks and sports drinks,
- tea and coffee, and
- alcoholic beverages.
Seasonal produce
Many food items are comprised of ingredients that are sourced from different countries in different seasons. This means that sources of ingredients can vary from batch-to-batch depending on the time of year, supply-and-demand and Australian market conditions. For food products that have varying percentages of Australian sourced ingredients, in addition to the mandatory kangaroo logo and bar chart, the label must contain explanatory text stating:
the average (rather than the minimum) proportion of ingredients, by ingoing weight that is Australian content,4 and
where consumers can find more information about the proportion of Australian ingredients in the food product they are purchasing.5
When does it commence?
The Standard applies from 1 July 2016. Growers, manufacturers, wholesalers and retailers of food products will have a two-year transition period from 1 July 2016 to update their food product labels to comply with the new labelling requirements. Any stock that features the old labelling requirements at the end of the transition period (1 July 2018) may still be sold to consumers until the shelf life expiry date.6
What are the consequences for non-compliance?
Under the Australian Consumer Law (ACL), it is illegal for a business to make false or misleading representations (express or implied) that food items (or ingredient components of food items) intended for sale in Australia were grown, produced made or packed in a particular country when this is not the case.7
Failure to comply with the Standard is a serious offence and can result in civil pecuniary penalties of up to $1.1 million (in the case of a corporation) and $220,000 (in the case of an individual).8 The court may also order disqualification, damages, injunctions to prevent continued prohibited conduct, corrective advertising and refunds. The Australian
Competition and Consumer Commission, the body responsible for enforcing the Competition and Consumer Act 2010 (Cth), can also issue infringement notices and impose enforcement and compensation orders such as court enforceable undertakings.
What are the next steps for food manufacturers and retailers?
Companies in the supply chain of the sale of food items in Australia should be aware of the obligations imposed by the Standard and ACL in relation to labelling, advertising, sales and marketing of food items. All food labels and promotional materials should be reviewed to determine whether it is compliant with the Standard.
Food manufacturers and retailers should also have in place clear procedures for signing off on representational materials and effective complaints handling procedures at retail, customer service and head office levels. In particular, food manufacturers and retailers that declare average proportions need to review these claims at least every two years and to ensure that the reference source consumers are directed to is entirely accurate and up to date at all times.
Endnotes
- The Standard is made under section 134 of the Australian Consumer Law.
- Australian Consumer Law, s 255(3). This definition excludes minor processes such as slicing, freezing, canning, bottling, crumbing, reconstituting or packing.
- Australian food manufacturers and retailers exporting food products overseas can choose to use the domestic label overseas, but there is no obligation to do so. Importantly, if the company is intending to use the kangaroo logo on exported food products, they need to obtain a licence from the Australian Made Campaign Limited.
- Country of Origin Food Labelling Information Standard 2016, s 11(2). The average proportion of Australian content may be calculated over a continuous one, two or three year period and may be relied upon for labelling purposes for a period of up to two years.
- Country of Origin Food Labelling Information Standard 2016, s 13. This information can be made available by the inclusion of a barcode, a website or telephone number.
- At the expiry of the transition period, Parliament intends to revoke the currently operational Food Standards Code and to have reviewed and clarified the current safe harbour defences for country of origin labelling provided in Part 5-3 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)).
- Australian Consumer Law, ss 136 and 137.
- Australian Consumer Law, ss 203 and 224.
For further information, please contact:
Patrick Sands, Partner, Herbert Smith Freehills
patrick.sands@hsf.com
