25 November, 2017
Changes to the Country of Origin Food Labelling Information Standard 2016 – imported foods
What you need to know
The new Country of Origin Food Labelling Information Standard 2016 came into effect on 1 July 2016 and compliance will be mandatory from 1 July 2018.
The Standard has recently been amended to address an issue with "Packed in Australia" statements. The statement "Packed in Australia from imported ingredients" may no longer be used on the labels of food grown, produced or made in a single overseas country. The labels of such food must include a statement that the food was grown, produced or made in that country.
The "Packed in Australia from imported ingredients" may still be used for food grown, produced or made in more than one country, even if the majority of the ingredients are from a single country. There is no requirement for the label of such food to identify the countries from which the ingredients are sourced.
The Competition and Consumer Amendment (Country of Origin) Act 2017, which came into force on 23 February 2017, simplifies the test to justify a country of origin "made in" claim by clarifying what "substantial transformation" means and removing the onerous requirement that at least 50 percent of the costs of production for the food were incurred in the relevant country.
In our "Labelling the Australian-ness of Food" article published in our Food Law Update on 6 September 2016, we reviewed the recent implementation of the Country of Origin Food Labelling Information Standard 2016 and discussed the practical effect of the new requirements under that Standard for country of origin labelling for food. The new Standard came into effect on 1 July 2016 and compliance will be mandatory from 1 July 2018.
The changes to country of origin labelling requirements under the Standard aim to give consumers better information about the origin of the food they are purchasing and consuming, with a particular focus on making it easier for consumers to identify the "Australian-ness" of such food. The Standard does this by requiring food businesses to include country of origin information on their product packaging. The requirements for what information is contained in the label vary according to whether the food was grown, produced, made or packed in Australia or overseas. The "Australian-ness" of food is indicated by the use of a kangaroo logo for food grown, produced or made in Australia, and a statement and bar chart showing the proportion of Australian ingredients (except where the food was grown, produced or made in a single overseas country).
As observed in our earlier article, however, the new labelling requirements – particularly the "made in" and "packed in" claims – do not necessarily give consumers all the information they would like about the origin of non-Australian ingredients in food. In many cases, this is not required to be stated in the new labelling.
The Australian government has recently amended the Standard to address one such issue in connection with "Packed in Australia" statements. Under the Standard which came into effect on 1 July 2016, food packed in Australia which was made, produced or grown overseas required a statement that the food was "Packed in Australia from imported ingredients", with a bar chart indicating the percentage of Australian ingredients, if any.
However, this had the unintended effect that food which was grown, produced and/or made in a single overseas country and subsequently packed in Australia could carry a statement that the food was "Packed in Australia from overseas ingredients" without identifying the country of origin of that food. This did not reflect the government's intention that food grown, produced or made in a single overseas country carry a statement to that effect.
The Country of Origin Food Labelling Amendment (Packed in Australia) Information Standard 2016, which came into effect on 6 December 2016, addresses this issue and now requires, as a minimum, that the label of food grown, produced or made in a single overseas country include a statement about where it was grown, produced or made. A statement that the food was packed in Australia and an indication of the percentage of Australian ingredients (through a statement and bar chart) are optional. The Explanatory Statement for the amended Standard provides the following example of how the amended requirements should work:
“Australian fruit is exported to Singapore and converted into juice before being shipped back to Australia in bulk for packaging here. The label could state in a clearly defined box that it was ‘Made in Singapore’. Alternatively, a standard label could be used that includes a fully shaded bar chart and a statement like ‘Made in Singapore from 100% Australian ingredients Packaged in Australia’, all in a clearly defined box. The label would not include the kangaroo logo — even though all of the ingredients are Australian, the juice was made in Singapore.”
However, the effect of the amendment is limited to food grown, produced or made in a single overseas country and there are still several scenarios where "Made in Australia" and "Packed in Australia" labels will not assist consumers to identify the overseas source of ingredients contained in that food. For example:
section 22 still allows a "Packed in Australia from imported ingredients" or "Packed in Australia from 0% Australian ingredients" label where the overseas ingredients are from more than one country. No further information about the countries from which the ingredients have been sourced is required; and
in contrast to the above Explanatory Memorandum example, a juice product which has been "Made in Australia" from 100% Singaporean ingredients could use the kangaroo logo along with the statement "Made in Australia" and a bar chart indicating that 0% of the ingredients are Australian. There is no requirement to say that the ingredients were grown or produced in Singapore.
Competition and Consumer Amendment (Country of Origin) Act 2017
In our earlier "Labelling the 'Australian-ness of Food" article, we referred to the proposed amendment to the "safe harbour" provisions for country of origin "made in" claims under the Competition and Consumer Act 2010 (Cth) (CCA). The safe harbour provisions under the CCA provide a defence to a misleading or deceptive conduct claim in respect of the use of "grown in", "produced in" or "made in" statements which comply with the provisions.
The Competition and Consumer Amendment (Country of Origin) Act 2017, which came into force on 23 February 2017, simplifies the test to justify a country of origin "made in" claim. Previously, businesses wishing to rely on the safe harbour provisions under the CCA in connection with a "made in" claim for a particular country were required to be able to establish that the food was "substantially transformed" in that country and at least 50 percent of the costs of production for the food were incurred in that country.
The changes in the Act clarify what "substantial transformation" means for the purpose of establishing a "made in" claim and remove the onerous 50 per cent production cost test.
"Substantial transformation" requires that the food is processed in a way that results in food that is "fundamentally different in identity, nature or essential character from all of their ingredients or components that were imported into that country". Importing ingredients and undertaking minor processes that merely change the form or appearance of imported goods (eg, dicing or canning) are insufficient to support a "made in [a particular country]" claim.
The removal of the "50 percent of the costs of production" requirement is particularly good news for food businesses who will no longer need to consider the proportion of local and imported ingredients by value to support their "made in" country of origin statements. It will be now considerably more straightforward for businesses to comply with the new "substantial transformation" test and therefore take advantage of the safe harbour defence under the CCA.
For further information please contact:
Joanna Lawrence, Ashurst
joanna.lawrence@ashurst.com
