Food labelling

Submission by the New Zealand Retailers Association Inc

on the Initial Assessment Report on Proposal P272 - Labelling

Requirements for Food for Catering Purposes and Retail Sale

February 2005 

Introduction

This is a submission on the Initial Assessment Report prepared by FSANZ on behalf of the New Zealand Retailers Association Incorporated (NZRA).

The Association is the largest trade association involved in the retail industry in New Zealand.  We represent an industry that has annual sales of over $50b and which employs some 325,000 people (17% of the workforce) in some 49,000 outlets throughout New Zealand.  Our membership includes the major supermarket and general merchandise chains, specialised chains, traditional department stores and thousands of owner operators.  We also service a number of specialised trade groups of plumbing materials suppliers, metal fastener distributors, bicycle dealers, pet shops, jewellers and equestrian suppliers.

Our smaller members include many food retailers including convenience stores, grocery stores, delicatessens, bakeries, cafes and confectioners.  We also work closely with other food retailing interests and grocery marketers through the Grocery Industry Council.  We consider that our membership includes representatives of the full spectrum of food retailers. 

The Association has an active interest in all proposals that impact on the retail sale of food in New Zealand.  We have consulted with members to the extent possible in the time allowed to respond to this paper.

We note that there will be a further opportunity for comment once the Draft Assessment Report is completed and request an opportunity to be further consulted in the process at that stage.

Our submission is largely limited to comment on the sections of the paper relating to Food for Retail Sale.  Although we do have members who are involved in catering and supplying packaged meals, we were not made aware of the proposals in time to seek specific comment from those members.  We will ensure those companies have the opportunity for input as the process proceeds.

In our view, the underlying principles determining the way food for retail sale is regulated should apply equally to each of the four areas covered by Proposal P272.

Comment on an appropriate regulatory environment for food retailing in New Zealand

On behalf of our many members that trade in food and food products, the Association expects that the standards and controls regulating trading in this area are realistic, practical and understandable for all traders in the industry.

We are supportive of the work of FSANZ to protect the health and safety of people in the two countries through the maintenance of a safe food supply, and also strongly support the work of the New Zealand Food Safety Authority (NZFSA) in its strategic aim to maintain a food policy environment that underpins our high performing and innovative food sectors and supports New Zealand's economic growth and prosperity.  We expect that controls on traders should be risk-based and well designed to minimise compliance costs and minimise the interventions where traders act responsibly and in accordance with good operating practices.

The retail market increasingly operates on a trans-Tasman basis and it is important that there is consistency between the two separate countries to minimise unnecessary cost to producers, traders and the consumer who will ultimately pay the cost of the control.  

The New Zealand trading environment includes both larger traders that are well resourced and technically proficient and a large number of small and medium enterprises that simply do not have resources, the technical skills or the knowledge to understand or apply complex and technical regulatory requirements.  There is also a growing sector of the market that has English as a second language.  The framework that regulates trading in this area must recognise these factors and balance the desire of officials and some activist groups for technical certainty with a realistic assessment of risk to consumers and the need to ensure that the market does deliver safe and healthy food to consumers at realistic prices.

In short, we believe that the rules for regulatory compliance have to be stated clearly in language that is accessible to all traders affected by them and the requirements are publicised in such a way that they are understood and usable by all participants in the market.

Specific comment on proposal

2.1  Food for Retail Sale

The standard currently applies to food at the point of retail sale and that places the onus on the retailer to ensure products are correctly labelled prior to sale.  In this regard, the control point is consistent with the New Zealand Fair Trading Act that also regulates product advertising and claims made on packaging.

We note that the proposals for change in this area primarily relate to an application from NSW Health to amend the Australia New Zealand Food Standards Code (the Code) to change references in Standard 1.2.1 from 'food for retail sale' to 'food for retail sale and food intended for retail sale'.  The rationale for this is that smaller businesses may not have the commercial influence to ensure goods are adequately labelled or to reject insufficiently labelled goods.  There is also a concern that smaller businesses may not have the capacity to convert information supplied by manufacturers into labels.

We note that FSANZ does not support the NSW proposal on the basis that the changed wording may cause confusion in that food for catering purposes may then fall into two categories with different labelling requirements.  It does however consider that there is merit in considering other approaches that ensure that manufacturers bear the responsibility for labelling food manufactured, packaged and intended for retail sale.

Response to Key Questions - 2.1

We are not aware of any major concerns with the application of the Code in this regard and do not see the need for change unless it is required to address real issues of food safety and public confidence.  Our preference is to leave the standard unchanged unless there is such a clear imperative for change.

If the proposal does proceed, we can see some merit in placing greater responsibility on the manufacturer for labelling at the point of manufacture and packaging, but again note that retailers in New Zealand are still required to accept final responsibility for labelling under the Fair Trading Act.  We cannot accept any change that leads to conflicting responsibilities under two separate legislative codes.

The potential for confusion arising from the proposal suggests that the costs and problems that will arise will vastly outweigh any possible benefits.

The practicality of any significant change in this area does need to be explored further by the parties that will be directly affected before changes are further developed.  We note that it is proposed to establish an External Advisory Group (EAG) with representation from NZ and Australian industry and consumers to review the proposals. 

We support this proposal and strongly recommend that the Group includes effective representation of retailers from both the larger, corporate sector and also the smaller enterprise sectors that will both be affected by the change.  The inclusion of industry representatives on an EAG aligns with the approach taken by FSANZ for the country of origin review.

2.2  Current Exemptions for Food for Retail Sale

2.2.1 Current requirements

We support the proposal to review the current list of exemptions and consider that it is prudent to review exemption lists on an ongoing basis.

The list of areas for consideration in para 2.2.3 covers the concerns we are aware of.  We will comment below on several of these points.

Response to Key Questions

The Association supports the review of the current exemption schedule and consideration of the list of additional issues set out in para 2.2.3.

2.2.3.1 - Review of Para 2(1)(b)

We support the review of the wording of the current provision to remove any ambiguity but do not see any need for change in the essential requirement to not require information labelling on small 'inner' packages that are not intended for sale without an outer package.

This point is indicative of the 'practicability' issues that we are concerned about.  Consumers receive adequate product information at the point of sale to make an informed choice.  Repeating this on inner packaging serves no useful purpose but does add substantially to the cost of the packaging.

Such packaging is commonly used on products sold for family consumption such as snack bars and confectionery.  The separate packaging for the single serve portions is popular with consumers - it is convenient to use and can be used in school lunches or similar without additional wrapping.  Any increase in packaging cost resulting from more complex labelling requirements would impact on family consumers.  To justify this additional cost, the industry would expect to see a real and significant risk from the present rules.  That is not evident in the information supporting the proposal.

Response to Key Question

We see value in reviewing the wording of para 2(1)(b) to remove any ambiguity but do not see any need to extend its current understood scope.

2.2.3.2 - Wrapped confectionery and small packaged items

In general we support the views expressed by the confectionery industry that applying effective controls at this level is impractical and for that reason we consider that the current standard is overly onerous.  The point is well made that the nature of the packaging required for small and irregularly shaped items makes it difficult if not impossible to present a label that complies with the standards.

Such items are usually sold from a bulk container or dispenser that could be used to display suitable labelling if the product contained substances that may produce a severe adverse reaction for some consumers.  Separate labelling of individual items is unlikely to add further value.

Response to Key Questions

We see the current labelling requirement for such wrapped pick and mix confectionery as overly onerous and consider that the restrictions could be eased without compromising consumer safety.

The rationale for applying the same approach to other small packaged items is also compelling.

2.2.3.3 Fundraising events

In general, we see no need for substantial change from the present rules and recognise that food prepared and sold by genuine charities or at genuine charitable events should be exempt from complex labelling requirements.  The discussion in the report on the concerns relating to sales in this context is clear and helpful to identify the issues that arise.  We can only record our reservations at the lack of effective enforcement against any such trader that abuses the clear intent of the standard. 

It is apparent at community and craft fairs that the labelling of some products sold by traders at those events falls well short of the current standard.  To the extent that those traders are using the charitable nature of the event as a justification to avoid the standards, enforcement is justified.  Some traders may be simply naïve and education should be the first response with enforcement used later if non-compliance continues.

As a matter of principle, we consider that anyone trading at such an event that is in business for their own benefit should not be considered to be exempt from the normal commercial standards that apply to traders operating in other retail markets.

Overall, we see this issue as mainly one for education and information in the first instance followed by effective enforcement where it is apparent that a person in business is knowingly trading in goods that do not comply with the standard.

2.2.3.4.1 Vending machines

We see no practical point in requiring additional information on the vending machine where the products on sale are correctly labelled on their individual packages.  Such requirements are expensive and cause problems for the trader to maintain the information for all products sold.  The variety of products sold in vending machines and the size of the machines themselves continue to grow.

We consider that the interests of consumers are effectively protected where all products sold in vending machines are labelled to the appropriate standard.  There are practical problems displaying useful information on the outside of a vending machine and such signage is difficult to maintain and subject to vandalism.  It is hard to see the value of such labelling or that consumers would access it before buying products that they are already familiar with.

Response to Key Question

We support the proposal to exempt vending machines from the requirement to carry a label on the exterior where the packages for goods sold in the machine are correctly labelled.

There are problems of unreasonable cost and practicability in maintaining effective product labelling on the outside of vending machines. We can see no effective benefit from requiring this to be done.

Unlabelled products in vending machines

As a general principle, we see no difference between sales in vending machines and sales of custom made products in any other food outlet.  The same labelling rules should apply to the individual products sold regardless of the outlet, subject always to a reasonable test of practicability.  The example quoted of a hot drink selected from a menu and dispensed from the machine by the consumer is clearly such a case.

We see no practical value in requiring labelling on the outside of a machine dispensing hot drinks, or for that matter on the cup.  The situation is directly analogous to selling a similar beverage across the counter which is clearly covered by the current standard - labelling is not required. There is no expectation that a customer purchasing a coffee in a café would expect or consider it appropriate to receive food advice on the saucer along with their sugar sachets.

If food safety information is required, the interests of consumers would appear to be adequately protected by general information provided at point of sale.  Detailed nutritional information cannot realistically be provided where the customer makes their own selection of ingredients and quantities in preparing the end product.

It must also be appreciated that technology is already available on the world market to deliver a wide range of food products assembled to order from a vending machine.  We expect that this technology will be widely used in years to come.

Response to Key Questions

It is not realistically practicable to require labelling food products sold in a vending machine where the final product is assembled to the customers order in the vending machine.  The standard needs to recognise this and also accommodate future growth in technology.  Practically, the standard must recognise that the narrow definition of packaging as suggested by the report cannot effectively cover vending machines as they now exist and will develop in years to come.

Where controls are necessary, they should not differentiate between products assembled to the customer's order by a vending machine and products assembled by traditional means.

We see no particular value on requiring labelling on the outside of the vending machine in these cases.

2.2.3.4.2 Hampers and similar packages

Our views on this point mirror our comments on products sold in vending machines.  The only practical option is to provide for an exemption from additional labelling where goods that are individually labelled in accordance with the standard are sold as a selection (or hamper) in a larger container.

It is likely that the nature of that outer container and the presentation of the individual products will obscure some or all of the product information on the component products.  We do not see any risk to the end user in this case.

Practically, most hampers are given as gifts and are usually assembled to match a specific menu offered by the retailer or to the customer's order selected from a product list.  In both cases, the individual products included in the selection are standard proprietary products that are subject to the appropriate labelling requirements for that product.  The end consumer has access to all appropriate product information before each item is used.

We see no value in any 'halfway house' solution such as partial labelling on the outer package. Such information would add no practical value to the end consumer and would derogate from the attractiveness and presentation of the hamper.

Response to Key Questions

We see no value in requiring external labelling of hampers or similar selections of goods presented in a gift package, where the individual components are fully labelled and no reason to impose partial labelling requirements either.

We strongly support the proposal to exempt hampers from labelling and to require the packages within to be fully labelled.

2.2.3.5 Food items wrapped at the retail outlet

The issue raised here relates to compliance with Food Safety Standards that do not apply in New Zealand.  However, the principle of providing realistic rules to cover such food, that is normally sold unwrapped and is therefore exempt from the labelling requirements, but that may be wrapped by a retailer to improve the quality and safety of the product for the consumer is one we strongly support.

2.2.3.6 Food items intra-company transferred

The situation described is an increasingly common one as companies strive to present high quality products prepared by well trained staff in central facilities that meet the highest food safety standards.  It is unreasonable to disadvantage such traders by requiring labelling standards that would not apply if the goods were produced and packaged in the individual outlets.

We see significant consumer benefits from exempting such traders from the labelling standards. Applying the standards would impose an additional cost that may well cause the trader to revert back to production and packaging at each outlet with consequent compromises to quality and food safety.

Response to Key Question

We believe it is appropriate to exempt food items made and packaged at one site and intra-company transferred.

2.2.3.7 Milk sold in glass bottles

We have not yet received input on this issue from the retailers in the limited areas of New Zealand that it applies.

On the face of it, it does appear reasonable to expect that the labelling requirements for milk are be consistent regardless of the type of packaging used for final sale.  However, we appreciate that there are practical issues relating to re-use of glass bottles and consider that little harm will be done to allow an exemption to allow milk to be sold in glass bottles.  Consumers have the option of purchasing milk in other containers that meet all labelling requirements.

We reserve the right in this area to make further submissions on the point if information supplied by affected retailers shows we have not understood issues relevant to the proposal.

2.3 Information requirements in subclause 2(2)

We do not have a sufficient understanding of the full implications of this proposal to comment on it in depth.

In this area as in other areas commented on, we are seeking standards and rules that are realistic and practical for retailers to apply on a day by day basis.  On the information supplied, we are not convinced that change is required in this area.

 Conclusion

The Association appreciates the opportunity to have input to this initial assessment phase of the Proposal.  We do not have technically qualified staff available to comment in depth on all issues covered by the proposal but have prepared this submission in an effort to ensure that the general views of affected New Zealand retailers are considered in the process.

As noted above, we support the broad process of food regulation followed by FSANZ and NZFSA, but do seek practical and realistic standards and rules that are accessible to and understandable by affected retailers.

We will review the Draft Assessment report when it is completed and confirm our wish to be consulted again at that stage of the process.

John Albertson

Chief Executive