Food Labelling and Policy Review

Submission to Food Labelling and Policy Review

Prepared by Lynne Wilkinson CEO Michael Gallagher Chairman

On behalf of The Australian Companies Institute (AUSBUY)

Representing Australian Owned and Made Producers and Food Manufacturers and Suppliers

email to [email protected]

P. 02 9437 5455 E. [email protected] www.ausbuy.com.au PO Box 10 CROWS NEST 1585

14 May 2010

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 1 A. Introduction

This submission was prepared in consultation with AUSBUY Corporate members who comprise a broad range of industry sectors, the majority of which represent the food industry and manufactured goods. Several AUSBUY Corporate members have made independent submissions to this current Review relating specifically to the nutrition values on labels. AUSBUY also has thousands of Friends who are AUSBUY advocates in their communities and who provide regular feedback about consumer issues and labels.

About AUSBUY AUSBUY represents only Australian owned companies. This does not include importers of foreign goods or foreign owned companies which operate here. It should be clearly stated that when referring to food companies AUSBUY members greatly exceed the “Made in Australia” compliance criteria for manufactured foods of 51% substantially transformed. All companies are 90% to 100% Australian owned, and source 80% to 98% of ingredients from Australia. Where a high proportion of ingredients are not available here they do not use the AUSBUY logo on the product, but state “Made from imported and local ingredients” or “Made from local and imported ingredients”, although in those cases the majority designate the specific country of origin. However over 95% of the manufacturing occurs in Australia, and the companies are managed within Australia, keep profits here and jobs here. Several are vertically integrated businesses from “paddock to plate”. (Note the AUSBUY Charter in Appendix page 12).

Senate Submission This paper follows AUSBUY’s “Submission to the Senate Inquiry into Truth in Labelling” which was also presented to the Senate in October 2009. A number of the issues raised in that Submission are relevant to the issues of consumer awareness, freedom of choice and right to know (Issues Consultation Paper ICP Part 1 -1.5) including the source of their food and the ingredients. We do not deal here with the specifics of nutritional value on labels or issues such as GM or organic foods. These have been addressed in the initial Submission and this can be found on our web site http://www.ausbuy.com.au/search_archived_news.html?&no_cache=1. Our concern from that Inquiry was that foreign food companies operating here wanted to retain the status quo on our labels, and AUSBUY trusts that the outcome from this Review will be an ordered and comprehensive approach to labels on products sold here for the long term benefit of Australian consumers and security of the Australian food industry.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 2 The Food Industry The Australian food industry is the largest manufacturing sector remaining in Australia and employs over 500,000 people in cities and regional areas. These figures do not include the hospitality sector. It represents hundreds of $Bs in turnover. Australian food production and manufacturing standards are among the highest in the world. For four decades Australia has lost many of our major food companies, and in the past decade the food industry has seen more aggressive takeovers of our major companies and brands by global food companies. Their strategies are to takeover familiar brands loyal Australians seek to purchase, and the channels of distribution, leaving our farmers at the mercy of low prices for their produce and return on their assets, or these companies close factories here and supply Australia with imports still labelled under our familiar brands e.g. Arnott’s biscuits.

The consequences of the loss of ownership means that while food manufacturing in 1957 represented 30% of Australia’s GDP; in recent years it has fallen from 4.9% of GDP to 2.9% largely because of our high dollar and cheap imports. Agricultural products in the past represented 80% of our exports. Today they are around 20% to 30%. In addition these are often high volume, but low value-added foods, which in turn erodes our manufacturing base, or are transactions by global companies selling to themselves off shore. The problem is that other than mining there are no major industries which have supplanted this productivity or our wealth and job creation. In addition, while these companies employ people here, the decisions are made elsewhere the profits sent off shore. Our current labelling laws do not reflect the changes in source of goods and ownership and consumers increasingly want to know.

In the current downturn in the economy we are seeing the volume of imported foods grow in direct competition with our own producers and manufacturers.

AUSBUY is concerned that Australian producers and suppliers have to contend not only with drought but structural problems within Australia that do not support the food industry as a key strategic industry.

Many of our decisions are undermining the comparative competitive advantages our food industry enjoys with our clean, green growing environment, whereas our trading partners in developed countries protect their food producers. In fact the USA, with which we have a Free Trade Agreement in Agriculture, uses centralised labelling regulations to limit imports while still appearing to comply with the WTO.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 3 AUSBUY contends that  many of the products imported to Australia are in direct competition with our growers and suppliers, and do not meet the same rigorous production protocols required here of our farmers and manufacturers, which in turn means that the quality of the food is not as high as local produce o consumers should be able to identify the country of origin for any product so they can easily determine what they choose to buy; o products which carry the threat of diseases and which put our local producers at risk should not enter the market.  labelling is one way to set standards to which all locally sourced and imported goods should comply, and we should copy the USA and centralise our labelling laws;  AQIS should be independent of the Trade portfolio so they can protect Australian food industry interests and its resources and concentrate on protecting our competitive advantages;  ACCC should be given stronger powers to act in a more decisive, timely and constructive manner when foreign owned companies operating here blatantly ignore our labelling laws, and should have the resources to exercise these powers. o Alternatively charge another organisation to focus on food labelling and have the powers to enforce recalcitrant behaviour.  Consumers should trust that labels mean what they say and should not be confused by the plethora of messages.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 4 B. DISCUSSION:

AUSBUY appreciates we operate in a global economy, but it is not a fair playing field (ICP Part 2 -2), and our labelling laws do not help consumers make informed choices (ICP Part 2 -3).

Issues of Concern

We need a disciplined approach consistent for local and imported foods.

“Country of Origin” should be mandatory as consumers are concerned about where their food is grown. Our labels do not identify the country of origin of many of our processed foods. Labels stating made from “local and imported ingredients” or “imported and local ingredients” do not provide consumers with the information they want. Consumers should be able trust that labels mean what they say and should not be confused by the messages.

We have labels Made in Australia or Made in New Zealand but these are deceptive unless the source of the food is identified; a. Issues such as “Fair Trade” and “food miles” are gaining traction overseas where retailers are actively promoting local and regional foods on the house brands (Tesco UK in 4,000 stores). b. Consumers are increasingly aware and discriminating about the health of the environment in which their foods are grown and the conditions of work. i. many countries exporting to Australia do not have the same wages, OH&S and growing protocols which are required of our producers; 1. the UK Guardian newspaper 11/2/2010 cited an official Chinese survey declaring that “Chinese farms cause more pollution than factories (with reckless use of antibiotics) with farmers’ fields a bigger source of water contamination than factory effluent”, a. the report comes out of China despite the resistance of the Agriculture Ministry to acknowledge the problem, 2. our food importers may say they supervise the quality control in China, but there are no set protocols within that system, and as soon as inspectors turn their backs, poor practices remain

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 5 ii. New Zealand has Free Trade Agreements with China in agriculture which Australia does not have, and much of our frozen food now comes from New Zealand, but the source of the food is not identified under our current labelling rules; 1. “Made in New Zealand” does not mean sourced in New Zealand 2. global companies dominate our frozen food sector and have been closing factories here to go off shore and import back into Australia, in the meantime our producers have to find alternative markets for their products (McCain closing their last frozen food factory in NW Tasmania in November 2010 to take operation to New Zealand leaving 200 factory workers unemployed. There has been some discussion that a Japanese company will take over this operation. Local farmers will then rely on this company to set the price they receive for their produce).

c. Country of Origin labels on each fresh food item are mandatory for local producers. However, imported fresh produce does not indicate the country of origin on each product. A company logo or name does not suffice. Consumers should not have to rely on disciplined practices in stores to state the correct country of origin at point of sale. There is little evidence on labels in stores that i. in the past five years the volume of fresh produce has risen substantially at the expense of our growers, ii. in the past year imports from China have increased by 27% displacing New Zealand as our major source of imported food, iii. fresh produce imports have also increased substantially from the USA, Peru, Mexico, Thailand and South Korea in the past five years 1. we have signed Free Trade Agreements which are invariably not to our advantage, and put our producers at risk with potential diseases e.g. apples from China and New Zealand, stoned fruit from Chile in our growing season, bananas from Philippines; iv. “Country of Origin” is especially important where a locally sourced product is available in the same growing season and given the land mass of Australian agriculture we have the benefit of long growing seasons.

Marketing Devices and Inferences Consumers need to trust that labels mean what they say. There are a number of marketing practices which erode the consumer’s trust in labels. d. There should be strict rules about the use of marketing devices which employ Australian flag or infer a product is Australian by using the word Australian or a map. i. In the USA you cannot use the flag without permission from the US Federal Government and rules covering its use are rigorously enforced.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 6 e. Some foreign owned companies infer they are Australian by using marketing devices such as the Australian flag, show provenance “Since 1893” or the word “Australian Blend”. when they in fact foreign owned and not sourced here, for example: i. Bushells Australia's Favourite Tea - owned by Unilever imported from Malaysia ii. Uncle Toby's since 1893 – foreign owned by Nestle and imported ingredients iii. Kirks Soft Drinks since 1856 - foreign owned by - Coca Cola iv. Lowan’s - Australian Owned and Made – owned by a British consortium f. AUSBUY understands the words Product of Australia are a Government designated labelling device to denote the product was sourced here. i. these words are now being used as a marketing device by an organisation which represents foreign interests, and they cannot be trusted to mean what they say when used in that context, ii. designations which have universal usage should not be used as a promotional device for organisations.

Australian Authorities The Government organisations charged with supervising transactions in our food industry do not appear to have a clear mandate to support local industry first, whereas in other countries this is a priority with their food security.

g. The ACCC is responsible for equitable business practices which protect competition and consumer rights, however AUSBUY had written to the ACCC from January 2009 about the labels used on Kirin on Dairy Farmers and Heinz on Golden Circle after their respective takeovers in November 2008. i. It took 12 months for Dairy Farmers to change their packaging and in that time continued to say it was Australian owned. h. despite AUSBUY’s many letters to the ACCC Heinz still sells Golden Circle products with labels declaring Proudly Australian owned and made 17 months after the farmers cooperative was bought out. i. It is now two months after the ACCC thought they had a victory by requiring Heinz to give away 80,000 cans of food to charity (written off before tax), and requiring shelf labels showing the true owner to be placed on products on display in store. ii. A survey by AUSBUY through several national supermarkets in mid May showed Golden Circle still say “Proudly Australian Owned and Made” and no evidence of shelf labels showing true ownership. iii. To add insult to injury Heinz paid the grower co-operative a reduced price because they had high stocks of labels which Heinz would have to replace.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 7 i. AQIS operates within the Trade Department and are charged with ensuring contaminated foods do not enter Australia. i. They appear to be under resourced yet send people overseas for months at a time to work with foreign farmers to help them get their product up to our standards in direct competition with our farmers e.g. navel oranges from the USA. The USA would not afford Australian exporters such support. ii. When setting criteria for imports which represent a risk to our producers e.g. apples from New Zealand, trees are tested when the fruit is immature and the diseases do not manifest till the fruit is mature which by then could be in Australia. j. It is our understanding that representatives from the USA sit on our BioSecurity Council, an Australian Government body which assesses threats to our interests. This information was sourced from the publication “How to Kill a Country” Australia’s devastating trade deal with the United States 2004 by L Weiss E Thurbon, J Matthews(Australian Academics). If this was true for that time it would be an unusual appointment for a foreign interest. AUSBUY has endeavoured to verify this information through contact with the Department of Agriculture, Fisheries and Forestry, but has been unable to determine the current situation. i. This issue came to our attention recently when a moratorium was placed for two years on beef imports from Countries with potential BSE. ii. Our concerns are that under our current labelling laws products which are a potential risk to our people and our agricultural sector may enter Australia via other countries and our current labelling laws do not identify this risk. 1. Products could be sent to New Zealand processed there and designation Made in New Zealand. k. In the current global economic climate many products are dumped in Australia at cheap prices without close supervision. i. The problem with our dumping laws is that the local company which is affected has to prove that the foreign product is being dumped. AUSBUY believes that the foreign company should supply legal lists of prices in other markets, and until such time as these are verified by the authorities here those products should not be available for sale.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 8 C. RECOMMENDATIONS

a. There should be nothing on labels which misleads consumer understanding and changes should be uniformly applied to local and foreign foods.

b. The primary Country of Origin should be a minimum readable size of 9 and a prominent and consistent position on all labels. i. Where there are a number of sources, all countries should be cited in order of volume from largest to smallest elsewhere and clearly on the pack. This practice is used on labels in Europe.

c. Some companies argue that because of the seasonality of food they cannot change labels to identify country of origin. However, there are examples already in place where this is done. All processed foods must be traced to the source and stamped with a code or date when packed. i. For example, the country of origin can be stamped at the time it is packed even if it is not on the label (e.g. Coles red salmon stamped Product of Alaska on the lid of the can) - an easy and cost efficient option.

d. All items of fresh produce should be clearly labelled with the Country of Origin, and in-store signage should reflect stock changes. This should be supervised and disciplined. Suppliers and retailers should be fined for misdemeanours and resources should be put in place through potentially through local government to enforce this.

e. Product of Australia should be a labelling device authorised for general use by the Government not a branding device used by interest organisations. Its use should be strictly supervised.

f. There should be strict rules about the use of marketing devices which employ Australian flag or inferring a product is Australian.

g. Heavy fines should be incurred if labels make false claims.

h. Labels should be in English and readable, and imports with foreign labels should have Australian standards labels pasted on them.

i. If foreign companies are allowed to take controlling interest in Australian companies, part of the approval by the FIRB should be that they change all their labels within three months of the purchase, that they state the overseas parent and local subsidiary ownership and sources, and incur heavy financial fines if this is not done. Australian tax payers should not suffer from their misdemeanours. i. They should also be required to pay equitable prices for goods supplied by local producers for a period up to five years, so they do not have the excuse that our farmers cannot supply demand and they source supplies off shore or close the factories here.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 9 j. If a company is accused of dumping they should supply evidence that they are not dumping. The victimised local company should not have to incur the cost to prove this. Many local businesses do not have the time or the resources to prove a dumping case. In the meantime, dumped products which do not comply with our rules set a low bench mark for price and quality, and impact those producers who are compliant. k. Imports should be scrutinised to ensure they meet the standards required of our local producers and manufacturers for food safety, Fair Trade and quality. l. The Quarantine services are the gatekeepers and should be better resourced across Australia to ensure poor practices are limited.

i. They should not be employed overseas to help importers meet our standards in direct competition with our producers and businesses.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 10 APPENDIX

ABOUT AUSBUY

AUSBUY’s Charter:

AUSBUY’s charter is to provide a means of cooperative marketing for Australian owned businesses by empowering consumers with information about companies that is not readily identified on labels or promotional materials. This information enables them to discern what companies they wish to support and products they wish to buy.

AUSBUY’s history:

Since 1991 AUSBUY (a not-for-profit organisation) has represented the interests of its members to consumers through the media and communities across Australia. In addition to hundreds of Corporate members, AUSBUY also has thousands of Friends of AUSBUY located in every State who provide regular feedback about labels which are misleading, and other issues such as change of ownership etc.

AUSBUY Corporate membership represents billions of AUD$ and thousands of skilled jobs to the Australian economy.

AUSBUY contends that ownership is important because every $1 spent on a locally owned and made product has a multiplier effect in our economy supporting skilled jobs. Every $1,000,000 invested by an Australian owned company produces 30 new jobs and a multiplier effect within our economy of 1 to 3 plus. This is called wealth creation. Ownership means that the decisions, profits and jobs stay here. Only AUSBUY can make that claim across all industry sectors.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 11 Submission prepared by:

Lynne Wilkinson CEO AUSBUY.

Lynne has held national marketing roles with Coles and MYER in the food sector, and has since consulted to various industry sectors including, food, agriculture, property and aged care. She also founded and ran a food business using only local suppliers for nearly a decade supplying local supermarkets, airlines etc and endeavouring to build an export business. In these roles she has direct experience of developing labels which comply with our rules and export markets. She initiated Food Media Club Victoria which she chaired for six years, advised the Kennett Government in setting strategies for Food Victoria and was invited by the Keating Government to set up the first Victoria Food Network for exports. She has only ever worked for Australian owned companies. She has been CEO of AUSBUY since October 2008.

Michael Gallagher CHAIRMAN AUSBUY.

Michael has held senior positions in Australia for the last 25 years including a directorship of a listed company. He also worked as Managing Director of AGB McNair Anderson Australia and New Zealand, and as such he was responsible television ratings as well as major research projects for state and federal governments of both parties. Prior to immigrating to Australia he held many senior international roles among these were Director of a Hong Kong based shipping company, Managing Director of the Fruehauf Corp in Iran, Managing Director of a major Saudi Trading Company and a Management Consultant with Peat Marwick. Prior to that he worked with Dunlop International and was part of the teams responsible for establishing manufacturing operations in Malaysia and Trinidad. Among the countries he has worked in were UK, Saudi, Iran, Hong Kong, South Africa, Malaysia and Trinidad. He has also been involved in other international projects and has an unrivalled background in the complexities of international trade.

AUSBUY to Food Labelling and Policy Review May 2010 02 9437 5455 12