Labelling the "Australian-ness" of food — a review of the new country of origin food labelling system 2016

On 1 July 2016 the new Country of Origin Food Labelling Information Standard 2016 (the Standard) came into force. The Standard sets out new mandatory country of origin labelling requirements for food sold in Australia.

Why have new country of origin labelling requirements been introduced?

Over the past few years there has been an increased interest from Australian consumers about the country of origin of food products and a focus on consuming foods that are “home grown”.

Recent incidents such as the hepatitis A outbreak in Australia in 2015 which was linked to the consumption of a contaminated batch of Nanna’s brand frozen berries sourced from China have highlighted consumers’ concerns about the origin of the food they purchase. That incident prompted the Australian Government to implement new country of origin labelling requirements with the aim of giving consumers better certainty about the origin of the products they are purchasing and consuming.

What are the new labelling requirements?

The Standard requires food businesses to include country of origin information in a clearly defined box on their product packaging. This is designed to make the information more easily visible to consumers. The requirements for what information is contained in the box vary according to whether the food was grown, produced, made or packaged in Australia or overseas.

As observed above, there has been considerable consumer confusion about the meaning of the terms “grown”, “produced” and “made”. These terms are defined in the Standard as follows:

• Grown = food is “grown” in a country if it has been germinated, materially increased in size or altered in substance, harvested, extracted or otherwise derived from a living organism in that country, or if all of its significant ingredients were grown in, and its processing occurred in, that country.
• Produced = food is “produced” in a country if each of its significant ingredients was grown or otherwise wholly obtained in that country and virtually all of the processing occurred in that country.
• Made = a food is “made” in a country if it underwent its last substantial transformation in that country. Food is “substantially transformed” if it undergoes a fundamental change in form, appearance or nature, such that the changed food is new and different from the food prior to the change. The definition does not include a requirement that 50% of the costs of producing or manufacturing the food were incurred in the “made in” country, as is currently required under the Australian Consumer Law (although this requirement will most likely be removed from the ACL as well).

There is no definition of “Packed”.

Grown, produced or made in Australia

If the food was grown, produced and/or made in Australia, the box must include the following:

• the Kangaroo logo;
• a bar chart showing the proportion of Australian ingredients; and
• a statement that the food was grown, produced or made in Australia and identifying the minimum proportion of Australian ingredients, measured by ingoing weight.

Examples of how the labels will look for Australian grown, produced or made products are depicted below:

   

These labels may also be used on packaging for Australian grown, produced or made food intended for export, which means that businesses may use the same packaging for food sold in Australia and overseas.

Packaged in Australia

If the food was packaged in Australia but not all the ingredients were exclusively grown, produced or made in Australia, the box may not include the kangaroo logo, but must contain a bar chart with the percentage of Australian ingredients, a “packed in Australia” statement and an Australian ingredients statement consistent with the bar chart (eg, “Packed in Australia from at least 10% Australian ingredients”).

Imported food

For imported food, the label must state the country where the food was grown, produced or made. The label may also state the country where the food was packed if that is different.

When food cannot claim to have been grown, produced or made in a single country, the label must state the country where the food was packed and that the food comes from multiple origins or is comprised of imported ingredients (eg, “Packed in Thailand from imported ingredients”).

The kangaroo logo may not be used on the label of imported food, even if all or a substantial proportion of the ingredients are Australian. However, the label of such products may include a statement specifying the proportion of Australian ingredients, along with a bar chart shaded to represent that proportion.

What food is covered by the new labelling requirements?

The new requirements will apply to all food that is offered for retail sale in Australia, including both packaged foods and foods that are sold loose, and food sold through retail outlets, markets, online or from vending machines.

Exempted and non-priority food

Foods sold in restaurants, takeaway shops, schools and other places where the food is intended for immediate consumption are exempted from the new labelling requirements.

Some of the labelling requirements will be optional for what are called “non-priority foods”, such as seasonings, confectionery, biscuits and snack foods, soft drinks, tea and coffee and alcoholic beverages. These foods will only be required to include a text statement of origin on their labels (ie, not within a box). However, businesses may use the country of origin labelling specified for priority foods if they wish.

Trade marks

The Standard does not operate to limit the exercise of a right given under the Trade Marks Act 1995 (Cth) in relation to a registered trade mark (section 5 of the Standard).

This means the Standard will not prevent a trade mark owner from using its registered trade mark in relation to its food products, even if the trade mark includes a similar kangaroo logo or bar chart device.

Food businesses need to be aware that the use of such a mark, or any mark containing words or symbols denoting Australia, in relation to food sold in Australia could still be misleading or deceptive in breach of sections 18 and 29 of the ACL if it falsely suggests that the product is grown, produced or made in Australia or contains Australian ingredients.

What will the changes mean for business?

The changes to country of origin labelling requirements are likely to have minimal impact on imported food, the only significant change being the requirement to include the country of origin statement in a clearly defined box on packaging for priority food.

The greatest impact will be on food businesses making “Australian” claims. These businesses will need to assess all priority food products to determine which new country of origin label is required and then redesign their packaging to incorporate the box containing this information.

In addition, businesses required or wishing to specify the percentage of Australian ingredients in their food will need to keep accurate records of the ingoing weight of all these ingredients, including where the percentage may change due to seasonal availability of certain ingredients. It will be possible for businesses to indicate the average Australian content as long as consumers are directed to where they may obtain additional information about how the Australian content is calculated.

One positive outcome of the changes for businesses making “made in” claims is that they will no longer be required to determine the percentage costs of production or manufacture in the country of origin to substantiate such a claim. The “safe harbour” defences under the ACL still need to be amended to reflect this change (ie, by removing the requirement for a business to establish that 50% of its production costs were incurred in the “made in” country).

Transition arrangements

Businesses will have two years, until 1 July 2018, to transition to the new labelling requirements. Businesses must continue to comply with the country of origin labelling requirements under the Food Standards Code until 1 July 2018, unless they choose voluntarily to adopt the Standard earlier. Food labelled after 1 July 2018 must comply with the new requirements, although businesses will be allowed to continue to sell stock in trade after 1 July 2018 until that stock reaches its use by or best before date as the case may be.

Will the new labelling laws have the desired effect?

As discussed at the beginning of this article, consumers want to be informed about the source of the food they are purchasing and consuming. There are a variety of reasons for this: consumers may wish to support local business by buying Australian products; they may perceive products from Australia or a specific country to be of better quality, fresher or less harmful to the environment; or they may have health and safety concerns about food sourced from a particular country. These concerns are reflected in the consumer testing conducted in the lead up to the new changes.

Identifying the “Australian-ness”

Identifying the “Australian-ness” of the food more clearly is an important way of addressing many of the concerns held by consumers, and the new labelling requirements do this by requiring the consistent use of the kangaroo logo, the bar chart showing the percentage of Australian ingredients, and the Australian country of origin claim, as described above. This labelling should make it easier for consumers to see at a glance the “Australian-ness” of the food they are purchasing.

“Non-Australian” food and ingredients

However, providing clearer information about the origin of “non-Australian” food and ingredients, is arguably also important to consumers (albeit not to the same degree as the “Australian-ness” of food), and the new labelling requirements only go so far in addressing this issue. While the country of origin claims must be contained in a clearly defined box, and only food which contains 100% ingredients from the country of origin may use “grown in” or “produced in” claims, there is no requirement for food “made in” or “packed in” Australia or another country to identify the origin of the non-Australian ingredients. A product labelled “Made in Australia from imported ingredients” complies with the Standard but leaves the consumer none the wiser about the origin of ingredients contained in the product. If, by way of example, this product had contained berries sourced from China around the time of the hepatitis A incident referred to earlier, that might have been information that consumers considered relevant to making a purchasing decision.

“Made in” claims

“Made in” claims may also continue to confuse consumers, particularly where this claim is used in relation to food made entirely or mostly from ingredients imported from other countries. For example, consumers may be surprised to learn that a product labelled simply as “Made in Canada” could, in fact, contain no Canadian ingredients. For food labelled “made in Australia”, consumers may have an expectation that such food would contain at least a reasonable proportion of Australian ingredients, in which case they may consider the use of this claim, along with the kangaroo logo, on food that contains no Australian ingredients to be “un-Australian”, despite the fact that the unshaded bar chart and the statement clearly indicate that the product has zero Australian ingredients. It seems inconsistent that a “made in Australia” product which contains no Australian ingredients must use the kangaroo logo, while a “packed in Australia” product made from 99% Australian ingredients is not allowed to use the kangaroo logo. Consumers may regard the “packed in” product as being more Australian than the “made in” product in this instance.

The new labelling requirements as they relate to “made in” claims and the origin of non-Australian ingredients in “made in” or “packed in” products could be improved, although it may not be until we have another “frozen berries” type incident that consumers start calling for further changes to food labelling to reflect these other concerns. For now, however, in most cases the new requirements will assist consumers to quickly identify the “Australian-ness” of the food they are purchasing and consuming and in this respect they are a significant improvement on the labelling standard under the Food Standards Code.

What you need to know

• On 1 July 2016 the new Country of Origin Food Labelling Information Standard 2016 (the Standard) came into force. The Standard sets out new mandatory country of origin labelling requirements for food sold in Australia.
• The new labelling requirements are intended to make it easier for consumers to identify where food has been grown, produced, made or packed, as well as the proportion of Australian ingredients contained in the food.
• Food which has been grown, produced or made in Australia must display the kangaroo logo, together with a bar chart and statement confirming the percentage of Australian ingredients.
• Food businesses may identify the country of origin of overseas ingredients contained in food “made” or “packed” in Australia or another country, but are not required to provide this information on the label.
• The Standard is made under section 134 of the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)) (ACL) (rather than under the Australian and New Zealand Food Standards Code where the current standard is located).
• The new labelling requirements came into force on 1 July 2016, although the requirements will only become mandatory from 1 July 2018.

*Anita Cade is a Partner at Ashurst (Sydney) — anita.cade@ashurst.com and Joanna Lawrence  is a Counsel,  Ashurst (Melbourne) — joanna.lawrence@ashurst.com

© Ashurst 2016. Reproduced with permission.
This article was published in Ashurst’s Food Law Update dated 6 September 2016 on www.ashurst.com.
A version of this article was first published in the Australian Intellectual Property Law Bulletin Volume 29, No. 7 – July 2016. This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions.