While supporting plans for a Country of Origin Labelling (CoOL) review, the Australian Food & Grocery Council (AFGC) is opposing the Australian Greens' proposed bill, which it claims would be to the detriment of the Australian food manufacturing industry.
In a submission to the Senate, the AFGC said the Accurate Country of Origin Labelling for Food Bill 2012 bill fails to provide clear and unambiguous information about the origin of processed, value-added food products and where these products are made. As a result, it said the proposed amendments would not provide consumers with the option to support employment in Australia, particularly rural and regional employment.
“If adopted, this bill will be to the detriment of the Australian food manufacturing industry, reducing international competitiveness, causing loss of manufacturing capacity in Australia and reducing returns to primary producers,” the AFGC said.
“Ultimately, consumers will bear higher costs either through increased prices of locally manufactured product, or the reduced availability and increased cost of fresh local produce as a result of a declining horticultural sector.”
The current test for 'Made in Australia' focuses on substantial transformation of the food product or where the jobs involved in that transformation are based. The AFGC believes that the test provides important and meaningful information for consumers and should not be lost.
The challenge for industry is to ensure that when a food is made predominantly with Australian produce, or alternative sources come from overseas, that it is labelled as such, while also retaining the use of the recognised term 'Made in' as an indication that the process of manufacturing along with the associated jobs, technology, safety and quality standards, occurred in Australia,” said the AFGC.
Principles for clear labelling
The AFGC stated that CoOL requirements must provide meaningful information on where significant transformation and value-adding has taken place. Additionally, it said a flexible and pragmatic approach that supports Australian jobs and takes account of seasonal factors and 'acts of god' is necessary.
“For almost all packaged foods sold at retail, it is estimated that about 90 per cent now have some element of imported packaging (can, plastic, aseptic packaging, labels, etc) and/or imported ingredients (yeast, cocoa, spices, specific oils etc),” the AFGC said.
"Some of the imported components are not available within Australia as it is cost-prohibitive to manufacture small volumes of speciality components for the Australian market.
“While some foods qualify for 'Product of Australia' and are manufactured in Australia, there may be very small quantities of imported ingredients, such as food processing aids or food additives included in the product.”
Flexibility and seasonality
Food manufacturers often rely on a number of different suppliers in order to deal with the seasonality, availability, supply flexibility and price of certain ingredients.
For example, while ingredients such as milk, wheat or salt may be available throughout the year in Australia, crops such as fruits and vegetables are seasonal. To guarantee a constant supply of processed foods, it can be necessary to import certain commodities when they're out of season in this country.
Natural disasters and disruptions to the supply chain can mean that manufacturers need to temporarily source one or more ingredients from alternate sources in order to ensure continuity of business and maintain product availability. This can cause issues for product labelling as packaging production is often carried out several months in advance.
“Industry requires flexibility in the way that legislation is applied to a particular batch or package, taking into account that sourcing of ingredients may be subject to variations in price and seasonal fluctuations in supply, while also ensuring that consumers are not misled about the origin of the food and its ingredients used by the manufacturer,” the AFGC said.
Meeting industry needs
The AFGC has proposed that new CoOL regulations are based on the origin of the ingredients and associated costs of manufacturing averaged over the normal annual business cycle and based on forward supply and production contracts.
“Establishing an annualised average of content as the basis of the CoOL declaration will not only be a practical measure for enforcement, it will also enable businesses to maintain continuity of production and supply of product in the event of interruptions to supply contracts in circumstances beyond the company's control,” the AFGC said.
As an alternative to the proposed bill, the AFGC has suggested the following requirements to clarify CoOL:
- Product of/Grown in Australia remains the premium claim, consistent with international obligations, but should be more effectively promoted to consumers.
- Made in Australia from Australian and imported ingredients means that at least 50 per cent of the total food content (by weight or volume) of the finished product originates from Australia and at least 50 per cent of the cost to produce the product was incurred in Australia.
- Made in Australia from imported and Australian ingredients means that five to 50 per cent of the total food content (by weight or volume) of the finished product originates from Australia and at least 50 per cent of the cost to produce the product was incurred in Australia.
- Made in Australia from imported ingredients means that less than five per cent of the total food content (by weight or volume) of the finished product originates from Australia but that at least 50 per cent of the cost to produce the product was incurred in Australia.
- This determination is made on the basis of supply contracts and other evidence that documents the intention of the business in sourcing ingredients aggregated on an annual basis of production.
- Disruption of the supply due to circumstances beyond the company's control, and therefore changes to supply contracts that may source imported ingredients, are permitted for a limited period of time provided the average annual content determined on an annual basis complies with requirements, or until such time as new labels can be provided.
