Get ready for a fresh look at labelling.
Food packaged after 1 July 2018 for sale in Australia must meet new country of origin labelling (CoOL) requirements under the Australian Consumer Law Country of Origin Food Labelling Information Standard (Standard).
Existing stock with old labels may be sold until the end of its shelf life.
However, food businesses risk substantial penalties if labels applied after 1 July do not satisfy the CoOL requirements ($220,000 for individuals and over $1m for corporations).
CoOL requirements have changed in relation to:
- the ‘substantial transformation test’;
- how this applies to origin claims for products ‘made in’ a country; and
- labelling requirements for food ‘grown’, ‘produced’, ‘made’ or ‘packaged’ in Australia.
What’s the ‘substantial transformation’ test and why it matters
Food grown, or wholly produced, in a country is clearly ‘made in’ that country. No further tests are required to substantiate a claim of origin. But what about food of mixed origins, with imported ingredients or overseas processing?
The substantial transformation test is used to justify a claim that a food is ‘made in’ a country. If a food meets this test, and is labelled according to the Standard, the producer can rely on the ‘safe harbor defence’ to lawfully claim the food was ‘made in’ a country, even if it was technically made in several countries.
The CoOL reforms have:
- amended the definition of ‘substantial transformation’; and
- removed consideration of production and manufacturing costs from the test.
Grown, produced, made – any difference?
Under the Standard, food is ‘grown’ or ‘produced’ in a country if:
- each significant ingredient or component was grown, or originated in that country; and
- all, or virtually all, processing occurred in that country.
Food is ‘made’ in a country if it underwent its last substantial transformation in that country.
Substantial transformation is:
‘where, as a result of one or more processes undertaken in that country, the goods are fundamentally different in identity, nature or essential character from all of their ingredients or components that were imported into that country.’
Minor processing, such as slicing, freezing, coating or crumbing food, is not regarded as substantial transformation.
Processes changing the form or appearance of the goods, for example mixing ingredients or adding colouring, are also insufficient to be regarded as substantial transformation.
Businesses no longer have to demonstrate 50% or more of total manufacturing and production costs occurred in that country to rely on the safe harbour defence. The defence now simply requires the goods were last substantially transformed in that country.
These changes relate to packaging for all food products sold in Australia regardless of country of origin.
Food made, grown, produced and packaged outside Australia
All packaged foods imported into Australia must comply with CoOL requirements. Labels must indicate:
- the country of origin of the food (additional text may be included indicating where the food was packed); or
- if the ingredients come from more than 1 country:
- the country where the food was packaged, if applicable; and
- that the food is of multiple origins.
Priority foods must have this information in a clearly defined box on the label. For example:
Priority foods are all foods excluding:
- biscuits and snack food;
- bottled water;
- soft drinks and sports drinks;
- tea and coffee; and
- alcoholic beverages.
Labelling requirements also apply to priority foods ‘grown’, ‘produced’, ‘made’ or ‘packaged’ in Australia. These must be labelled in accordance with the Standard using Standard labels. Label components must contain all required components and must be displayed as a whole.
Packaged in Australia
Where a priority food is packaged in Australia, the proportion of Australian ingredients must be indicated using a bar chart in the form required under the Standard, for example:
Food ‘grown’, ‘produced’ or ‘made’ in Australia
There are 3 elements to the Standard labels for priority foods ‘grown’, ‘produced’ and ‘made’ in Australia:
- kangaroo logo,
- description of percentage of Australian ingredients; and
- the proportion of Australian ingredients illustrated in the form of a bar chart.
If the priority food ‘grown’, ‘produced’ or ‘made in’ Australia has also been exported to and from Australia, the mark must also include a description, in brackets, of the processing that occurred outside Australia (e.g. cleaning, shelling, packaging, re-packaging).
Priority foods containing exclusively Australian ingredients can use simplified versions of the label, such as:
Non-priority foods ‘grown’, ‘produced’ or ‘made’ in Australia must include a statement to that effect. Standard labels may be used for non-priority foods though not mandatory.
These changes to CoOL requirements are certainly more complex than the current regime.
What should you be doing?
Article co-written by Viv Lister and Cat Nguyen, Bespoke.