Country of Origin Inquiry Report released – overall compliance is good but consumers are in the dark
The House of Representatives Standing Committee on Agriculture and Industry has released its eagerly awaited report on the inquiry into country of origin labelling for food. Country of origin remains a “hot topic” with key stakeholders such as consumers, food producers, manufacturers, and importers having conflicting interests on whether there is a need for reform and what any reform should entail. Despite the length of the report (140 pages), there are no ground breaking revelations or recommendations for a fundamental overhaul, but rather more tinkering. Ultimately the Committee supports the current non-prescriptive manner in the way a food manufacturer or marketer should represent a particular food’s country of origin status.
Background to the Report
Country of origin labelling has long been a political hot potato. There have been 11 past inquiries into food labelling since 2003. In addition a number of bills have been put before Parliament seeking to change how country of origin is represented (see our previous blog post here).
On 27 March 2014 the Minister for Agriculture, the Hon Barnaby Joyce MP and the Minister for Industry, the Hon Ian MacFarlane MP asked the Committee to inquire into and report on whether enough information is provided to consumers about country of origin food labelling and whether improvements could be made. The Committee held 7 public hearings and received 54 submissions (and 7 supplementary submissions) from a wide variety of stakeholders including Food Standards Australia and New Zealand, the Australian Food and Grocery Council, the Law Council of Australia and the Australian Competition and Consumer Committee. The Committee was chaired by Mr Rowan Ramsey MP and was made up of representatives from both sides of politics.
There are 8 key recommendations made by the Committee.
From an industry perspective, one of the more interesting aspects of the report is the finding that, based on reports from regulators and government departments, compliance with current laws is “generally good”. However, despite this, one of the key issues identified in the report, which has long been the headline story on television current affairs programs, is “consumer confusion” about what country of origin labelling actually means. The recommendations made are an attempt to address this perceived problem.
Recommendations 1 and 4
The Committee’s first recommendation involves changes to the “safe harbour” country of origin defences that can currently be relied on. The safe harbour defences are set out in section 255 of the Australian Consumer Law and cover claims such as ‘made in’, ‘produce of’ and ‘grown in’. If a company makes a country of origin claim, and it is alleged to be misleading, deceptive or false then there is an automatic defence to the allegation if the company can show that the product meets requirements for the safe harbour defence for that claim. The requirements which must be fulfilled in order to make a claim can be quite prescriptive. Some aspects of the requirements may not be readily understood by consumers (for example the requirement that a product is “substantially transformed” in the country).
The Committee received a large number of submissions regarding the label “made in Australia from local and imported ingredients”. This was identified as being one of the more confusing country of origin claims on food labelling though one of two mandatory statements required under the Food Standards Code. The claim combines a number of concepts including that the product is “made in Australia” and that it uses both Australian and imported ingredients. In order to address this. the Committee has suggested separating out the claim as follows:
- “made in Australia from mostly local ingredients”; or
- “made in Australia from mostly imported ingredients”.
The report notes that the threshold between the two categories would be 50 per cent of content. However, this doesn’t necessarily seem to accord with the representation that the product is “mostly” made from local or imported ingredients and query whether it helps to provide any clarity for consumers. The Agricultural Competitiveness Green Paper released earlier this month (read our blog post about it here) similarly suggests that labelling should make it clearer as to the domestic and imported components of products.
Recommendation 4 of the Report is to include a “visual descriptor” that reflects the safe harbour thresholds of Australian ingredients in the content of a product (i.e. a graph which represents the percentage of local and imported ingredients).
Although the recommendations made by the Committee may address one aspect of consumer confusion by separating out the local and imported ingredients claims, from a consumer point of view there is still likely to be confusion about a claim that a product is “made in Australia” whilst at the same time containing “mostly imported ingredients”. Given this, industry is unlikely to support with this change.
The Committee supported retaining the current claims “Grown in”, which requires 100% of products to be grown in Australia, and “Product of” which requires 90% of the ingredients to be from Australia. The Committee also supported the introduction of a newclaim where 90% of the ingredients for a product are from a claimed country, which would be represented as “made in Australia from Australian ingredients”.
The third recommendation suggests that there be increasing surveillance by regulators (particularly the ACCC) of Australian symbols, icons and imagery on labels. Although the Committee notes that the ACCC guidelines are sufficiently clear, it claims that there is a need for more emphasis on enforcement. As reported here the ACCC have over the last few years been very active in prosecuting misleading credence claims, particularly country of origin claims. Given the ACCC’s recent activity in this area, industry has long been on notice that misleading statements or imagery regarding country of origin will likely be scrutinised by the ACCC. Therefore, this recommendation is somewhat surprising.
Recommendations 2 and 5-8
The remaining recommendations deal with minor issues such as increasing font size on packaging, or implementing a consumer education program. However, none of the recommendations appear to have really addressed the underlying problem the report itself identifies which is that consumers do not understand the current labelling options.
We will wait to see what develops out of this report and whether the government takes up any of the recommendations. The government has yet to respond to the report. Given the difficulties in implementing the front of pack star labelling system (see our article) that any course of change is unlikely to be quick or a smooth one.