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Truth in Labelling of Production Methods
Current Situation
Requirements
Options
Constraints
Conclusions
Current Situation
In August 1999, ARMCANZ agreed in principle with the desirability of a nationally consistent system of truth in labelling of production methods in the egg industry. Standing Committee on Agriculture and Resoruce Management (SCARM) was asked to prepare specific recommendations for a decision at the next meeting.
A significant minority of consumers are willing to pay a premium for eggs from non-conventional cage systems, with this market representing less than 10 per cent of total egg sales. The establishment of a uniform, Australia-wide system of truth in labelling of production methods in the egg industry was seen as a way to ensure that the market fully satisfies consumers' preferences.
Labelling of eggs by production system is done in various ways in Australia and overseas. Mandatory labelling of all eggs, by production system, is enforced only in the Australian Capital Territory (ACT) where labelling is part of a strategy which attempted a phased banning of the production and sale of eggs from conventional cage systems. In the UK there is a detailed but voluntary system of labelling by production system, which is used in effect only by producers using other than conventional cages. Enterprises in all EU countries using certain labelling terms (eg 'free range eggs', 'deep litter eggs') must comply with minimum production criteria defined by EU regulations. There are no production based labelling requirements for eggs in the US and New Zealand; it is left to the market in both countries.
Existing trade practices and fair trading legislation should allow prosecution for inaccurate labelling (ie dishonest passing off of eggs as coming from different production systems) and misleading labelling (ie labelling designed to obscure or gloss over the eggs’ true origins). However, in practice such prosecution is difficult as evidence is hard to gather and there are no clear legal definitions of egg production systems.
Stakeholders tend to divide into three groups. Animal welfare and consumer interests support mandatory labelling by production system. Producers using alternatives to conventional cages are more concerned to ensure that they have access to a secure and credible labelling system for their product. The main commercial producers and the supermarkets support labelling but prefer to leave production labelling to the market except on strictly food safety grounds.
Requirements
The following are considered by the Working Group as essential prerequisites for any system of uniform, Australia-wide labelling standards:
- Accurate definition of egg production systems operating in Australia. (ie for conventional caged system, barn laid system, free range system)
- Development of accurate carton labelling specifications - clear concise wording, letter size and colour and site on the carton for the label.
- An extensive public education campaign to assist consumers in understanding the various production systems and the descriptions on the labels.
- Application of the enforcement provisions of the Trade Practices Act 1974 (TPA) and the various State Fair Trading Acts, which should be made widely known to the industry, to address instances of misrepresentation.
Options
There is a range of options, from mandatory and strictly enforced labelling of all eggs by production system, through various sorts of Code of Practice / QA systems, to the basically status quo position where labelling other than that required for public health purposes is left to the marketplace and the provisions of the TPA or fair trading legislation.
Mandatory labelling would require consensus among jurisdictions, including on the issue of whether to use animal welfare legislation or food legislation. Both are possible but neither is straightforward.
An intermediate position could be based on using the industry code provisions of the TPA. This mechanism could incorporate either a mandatory system, or perhaps more practicably, a voluntary system (like the UK’s) which could be used to provide a secure marketing framework for producers not using conventional cages.
The option preferred by the commercial egg producers and the supermarkets would require no significant changes to law. However, there seems to be a definite need to ensure that inaccurate and misleading labelling are more readily subject to prosecution, so that consumer choice is not distorted.
The following are the three main options:
Option 1 Legislation for compulsory labelling
This would involve the introduction of specific legislation, as complementary law in all States and Territories, to impose mandatory labelling by production system. It would probably need to build on existing legislation and in this regard there are two sub-options:
- Food legislation, as in the ACT – provided Health agencies accept this as an appropriate part of their role and subject to the likely impact of the proposed Model Food Act; or
- Animal welfare legislation, if consensus could be achieved that labelling was a de facto animal welfare issue.
Health agencies are very unlikely to agree to use of food legislation.
Option 2 Secure labelling tied to an industry code
National standards for egg labelling would be implemented by the egg industry as part of a national quality assurance program for the egg production industry which would include provision for third party auditing of egg producers for compliance with egg labelling standards. This would include definitions of all egg production systems operating in Australia and minimum specifications, i.e. standard descriptions, print font size and siting on packaging and could be declared (as either voluntary or mandatory) under Part IVB of the TPA.
The egg industry and government would jointly develop national standards for egg labelling in relation to production methods. There would be consultation with the retail sector, consumers, animal welfare groups and other stakeholders. It is desirable that draft standards be prepared within six months for consideration and endorsement by ARMCANZ. Once endorsed, the standards would be implemented within the ensuing six months.
After twelve months of operation, implementation of national standards for egg labelling should be reviewed jointly by the egg industry and government. Such a review could determine the level of take-up of the standards and identify if any necessary changes to the standards are required. If implementation is not considered satisfactory, then uniform national legislation to enable stricter regulation of the standards should be immediately developed (possibly under TPA/Fair Trading legislation).
The costs of compliance, especially for smaller operators, is an issue that could be addressed by the working group developing details of labelling.
Option 3 Industry self-regulation and market forces
If necessary, any public health concerns could be addressed by mandatory labelling requirements, but the rest would be left to the market. This would rely on consumer preference on the demand side and the price premium on the supply side. Market driven labelling currently means clear labels for barn laid and free range eggs and no or minuscule labels for eggs produced in conventional cage systems, and this is likely to continue for the foreseeable future.
Consideration could be given as to strengthening the general provisions of the TPA / fair trading legislation to properly address dishonest labelling designed to capture the non-conventional having price premium, or misleading labelling that seeks to gloss over the distinctions between production systems.
Constraints
Among the significant constraints to be considered are:
- The Australia New Zealand Food Authority Act 1991 deals primarily with public safety and health matters, and the Health Ministers and the Authority appear to require strong reasons to move beyond these.
- The Australian Egg Industry Association and the Australian Supermarket Institute only support the labelling arrangements of the Australia and New Zealand Food Authority without reference to production methods and prefer market forces to apply.
- Uncertainty as to the extent to which a Technical Barrier to Trade (TBT) related labelling issue referring to animal welfare could be validly applied to goods being traded internationally.
- Enforcement could be difficult, particularly in the smaller retail sector, and could impose some cost on Government.
- Compliance costs of any mandatory system may be significant for the industry; particularly smaller producers and these will be passed to consumers.
Conclusions
- Option 2 is the preferred option with a uniform, Australia-wide set of labelling standards developed jointly by Government and industry in consultation with the major animal welfare groups and other key stockholders.
- An education campaign to assist consumers in understanding the various production systems and the descriptions on the labelling is also seen as an important element.
- Draft standards should be prepared within six months for consideration and endorsement by ARMCANZ. Once endorsed, the standards would be implemented within the ensuing six months.
- To support the development of a national quality assurance program, which embraced a national labelling code, ARMCANZ should endorse the need for legislative underpinning of the program, i.e. co-regulation, and request SCARM to examine suitable arrangements to achieve a uniform national approach to this development.
- If implementation by industry of a national labelling code was not considered satisfactory, then uniform national legislation to enable stricter regulation of the standards should be immediately developed (possibly under TPA/Fair Trading legislation).