Country of origin labels – are you the full package?

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).^[1]

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).

Part 1 of our CoOL update considers:

the new ‘substantial transformation test’; and
how this applies to origin claims for ‘made in’.

In part 2, we consider changes to labelling requirements for food ‘grown’, ‘produced’, ‘made’ or ‘packaged’ in Australia.

What’s the test and why it matters

Food grown, or wholly produced, in a country is clearly ‘made in’ that country. No additional tests are required to make a claim of origin. But what about food of mixed origins, with imported ingredients or components?

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 ‘substantial transformation’ definition; and
removed references to production and manufacturing costs.

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.^[2]

Substantial transformation is defined as:

‘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.’^[3]

Minor processing, such as slicing, freezing, coating or crumbing food, is not 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.

Stay tuned for part 2.

^[1] Competition and Consumer Amendment (Country of Origin) Act 2017 (Cth) and s 134 Australian Consumer Law.
^[2] Country of Origin Food Labelling Information Standard 2016 s 8; see also Australian Consumer Law s 255(1).
^[3] Australian Consumer Law s 255(2).

^{That’s ‘bazaar’!.}
^{Chocolate is the answer – what’s the question?.}