CORRECTED VERSION RURAL AND REGIONAL COMMITTEE Inquiry into the impact of food safety regulation on farms and other businesses Melbourne — 22 October 2012 Members Mr D. Drum Mr I. Trezise Mr G. Howard Mr P. Weller Mr A. Katos Chair: Mr P. Weller Deputy Chair: Mr G. Howard Staff Executive Officer: Ms L. Topic Research Officer: Mr P. O’Brien Witness Mr R. Weine, chief executive officer, Bulla Dairy Foods. 22 October 2012 Rural and Regional Committee 28 The CHAIR — Welcome to the Victorian Parliament’s Rural and Regional Committee. We are currently running an inquiry into the impact of food safety regulations on farms and other businesses. I hereby advise that all evidence taken at this hearing is protected by parliamentary privilege as provided under relevant Australian law. I also advise that any comments made outside the hearing may not be afforded such privilege. Reg, for the benefit of the transcript can you state your full name and address. Mr WEINE — Certainly, My name is Reginald Weine of The CHAIR — Would you like questions as you go or at the end of your presentation? Mr WEINE — Paul, I have not prepared a formal presentation so I am here to respond to questions. The CHAIR — If you would like to make some opening remarks then go ahead. Mr WEINE — Sure. I guess the opening remark would be that it is a privilege to be here to address the committee. I thank the committee for the opportunity to do so. I am the CEO of Bulla Dairy Foods, based here in Victoria. We have three manufacturing sites with over 500 employees. We have been in business for 102 years, so dairy is well known to us, as is food safety. I would like to make an opening comment in support of Dairy Food Safety Victoria. As an agency body, and we deal with many agency bodies, they are an incredibly efficient, professional and very outcomes-focused agency, and our experience in dealing with them has been very good over many years. The CHAIR — What is the audit process for your company? What requirements does your company have to meet to satisfy Dairy Food Safety Victoria? Mr WEINE — As a large-scale manufacturer, the requirements are not at all onerous. There is a cost, and for us that cost is in the order of $150 000 to $200 000 per year. That cost obviously includes some third-party assurance and certification by a number of our retail partners, and I guess that in itself creates some complexity because there are different audit regimes that we need to be compliant with. The CHAIR — Do you have farm supply, or do you have other companies supply your milk? Mr WEINE — That is a good question. Where Bulla sits in the value chain, we do not collect farm-gate milk. We do purchase whole milk, but that milk comes from one of the many processors that service our industry, so the likes of Fonterra, Murray Goulburn and Warrnambool Cheese and Butter. We take in whole milk and obviously the constituent parts of milk such as skim milk powder, whole milk powder, butter fat or cream. The CHAIR — Is Bulla ice-cream for the domestic market or for the domestic and export markets? Mr WEINE — Bulla exports to 22 countries around the world and has been doing so for a number of years. The CHAIR — To meet domestic standards, do you have an audit by AQIS or DAFF? Mr WEINE — Yes. As an exporter we are AQIS accredited so we have to have audits by AQIS. We obviously have audits from our major retail partners, which is the VQMS system of audit. We have two audit regimes, if you like, or at least two, which does make it a little bit challenging. Mr HOWARD — In regard to that, do you find that the requirements placed upon you by Dairy Food Safety fit in well with the audits that you have to do for other purposes, or is there a sense that you are doubling up on some of the auditing you are doing? Mr WEINE — I think it is fair to say — and we have shared this view with the agency — that we think there is some overlap and some duplication. We understand the reasons why. Mr HOWARD — Why would there need to be any doubling up? 22 October 2012 Rural and Regional Committee 29 Mr WEINE — I guess there are standards that AQIS impose that are based on export country regulatory regimes that may be somewhat different from the domestic market. I guess there is recognition that there could be two different standards. Mr HOWARD — But they should not need to double up, except that you would acknowledge that you have a different — — Mr WEINE — No. In our case the higher standard, be that AQIS, may be preferable. We then have retailers who do not acknowledge Dairy Food Safety Victoria’s standard and want their own standard imposed, be that BRC or VQMS or something else. We can end up with four or five different audit compliance regimes, which add cost and complexity and can be quite challenging. Mr HOWARD — You said you have had discussions with Dairy Food Safety about some of those areas where you see some doubling up. How have you found their response, and what are the areas you would see a committee like ours pursuing to reduce that doubling up? Mr WEINE — Good question, Geoff. We have shared our views. As I said at the outset, we have found our experience with the agency to be very good. They listen very effectively to our concerns as stakeholders, and we are just one of a number of stakeholders that they have to listen to. Specifically we have shared with them where there is duplication between AQIS and their organisation. I guess we continue to lobby through organisations like the AFGC, which is our peak industry body. The CHAIR — Did you say the AFGC? Mr WEINE — The Australian Food and Grocery Council, representing food manufacturers. I guess they lobby government on our behalf with regard to the fact that we have these differing standards and multiple audit requirements. Taking that view back to retailers on behalf of members is one thing they would do. Mr HOWARD — Could it be that if you are meeting AQIS standards, you should therefore get an automatic tick of approval from DFSV? Mr WEINE — Yes, that is my view. Mr HOWARD — Good, we have got that clear. And there is nothing else within Dairy Food Safety Victoria that is not already accredited under AQIS, in other words? Mr WEINE — It is not my area of expertise, so I do not profess to have a detailed working knowledge of it, but that is my layperson’s understanding. Obviously Dairy Food Safety Victoria has a slightly different pre-processing responsibility. So for a producer of milk and milk products it might be slightly different from what it is for us as a manufacturer. Mr HOWARD — And Bulla works in different states and has factories in different states? Mr WEINE — No, we only have three factories here in Victoria. But we are certainly challenged by the fact that each state has its own food act, as I understand it, and there are some nuances between the food regulations of each state and there is not one national, unified code. Mr HOWARD — Are they very significant for you? Mr WEINE — The changes, or the — — Mr HOWARD — The variations between states? Mr WEINE — Again I cannot talk to the specifics, regrettably, but my team tells me on occasion that it does create some challenges, yes. Mr HOWARD — Any information you can provide us along those lines, of course, would be useful. Mr WEINE — Sure. I have brought some notes, so let me just refer to them to see if there is anything in there around the differences by state. My team has provided some further comment. Not that it is adding a lot of value to this inquiry, but it says that whilst: 22 October 2012 Rural and Regional Committee 30 The regulations do work … The main comment here is a national dairy/food standard would be better — — than state based — … National standard has been floated many times and doesn’t seem to get much traction. The CHAIR — There probably is a national standard; it is whether the interpretation is consistent. Mr WEINE — That is my understanding, that is right. It is open to interpretation, correct. And I think enforcement is still done on the same basis; is that right? The CHAIR — Yes, but it is how the states interpret it? Mr WEINE — Correct. The CHAIR — You supply supermarkets? Mr WEINE — Yes, we do, both branded and private label. The CHAIR — Do they have different quality requirements to what you do at a dairy food safety level? Mr WEINE — Yes, they do. We have VQMS, which is the Woolworths vendor quality management system; we have something else for Coles, which I think is BRC; and then Aldi has its own. So there are three, with three customers. I cannot comment as to what standard Metcash audits to, but I am sure that is different again. And there are some nuances between what they require and what — — Mr KATOS — Do you need a separate auditor for each, or does one auditor do all three, for example? Mr WEINE — That is a good question. I think we can have one accredited auditor for at least two of the three, if not all. But there is a point that my team made about that, if you would just allow me to look at my notes.