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Why has AFGC developed the Code of Practice?
There are various approaches to managing the food regulatory system. Full regulation by government is important for when market failure can have a substantial negative effect on the community. In many instances industry codes of practice can be an effective regulatory measure that complements full regulation to facilitate growth and productivity, while meeting the needs of the wider Australian community.
According to the ACCC, codes of practice offer a cost-effective way to address market failure in an industry and provide:
- flexibility and sensitivity to market circumstances
- ownership to industry of regulation of their industry
- the opportunity to set benchmarks for best practice in industry
- a rapid dispute resolution mechanism to resolve issues between industry members or raised by members of the public.
Recently there have been calls for full regulation in a number of areas related to food labelling that impact on the activities of the food industry. These include front-of-pack labelling, nutrition and health claims, premium claims and claims related to the environment, animal welfare and fair trade.
The Code of Practice for Food Labelling and Promotion (the Code) provides a mechanism for the food industry to collectively moderate activities in relation to the labelling and promotion of food, which is in line with community expectations. The aim is to reduce the need for restrictive black letter law imposed by regulators that places increased pressure on industry and can stifle innovation. Return to top of page.
How does the Code operate?
The Code has been developed based on guidance provided by ACCC, which specifies that for codes to be effective they must:
- state clearly the purpose and intended outcomes
- be managed by a code administration body
- enable stakeholder representation
- cover as much of the industry as possible
- ensure effective complaints handling procedures
- ensure in-house compliance systems
- illicit sanctions for non-compliance
- be widely communicated
- be monitored and the results reported
- undergo periodic review to ensure the objectives are being met.
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Do food companies automatically have to comply with the Code?
AFGC intends that the Code be suitable for all food suppliers in Australia, including manufacturers, importers, wholesalers, distributors, packers and retailers. AFGC encourages all member and non-member companies to consider complying with the Code’s provisions. Companies can formally commit to the Code by becoming signatories through a letter to the Code Manager (a template is provided in the Code). Return to top of page.
What food labelling and promotion aspects does the Code contain?
The Code currently covers three components:
- Daily Intake Guide front-of-pack labelling (% DI thumbnails)
- Date marking
- Allergen labelling
These are initiatives that are currently in place; however, are now being formalised into one single code. Additional components may be added at a later stage if it is decided there would be a useful purpose.
The Code outlines ‘Principles of Good Labelling Practice’, which are:
- Labels and advertisements comply with all relevant Commonwealth, state and territory legislation.
- When the Daily Intake Guide labelling scheme is used it is in accordance with the provisions in the Code.
- Date marking practices are undertaken in accordance with the provisions in the Code.
- Allergen labelling practices are undertaken in accordance with the provisions in the Code.
This means that all signatories do not have to use the DIG labelling; however, if they do it must be undertaken in accordance with the details outlined in the Code. Likewise, companies may continue to use their in-house allergen labelling system; however, if they choose to implement one or more aspects of the allergen labelling principles in the Code they must be used in their entirety. Return to top of page.
How is the Code managed?
There are various layers to the administration of the Code. The Code Administration Manager (the Code Manager) coordinates the management of the Code, with the assistance of a Code Steering Committee and Complaints Committee. Specific management duties include:
- developing an annual business plan and budget
- interacting with consumers and industry on matters relating to the Code
- facilitating a complaints resolution procedure
- coordinating compliance monitoring and review.
A Code Steering Committee provides the overall governance for the management of the Code with extensive support from the Code Manager.
A Complaints Committee will be called upon to deal with specific complaints, where they will make a determination as to whether there has been a breach and determine actions required to rectify the situation. They may also recommend sanctions.
The Steering and Complaints Committees are made up of industry and non-industry representatives to ensure balanced representation. Return to top of page.
What must companies do once they sign up?
Companies should designate someone to act as the Code contact point and provide their details to AFGC. They should familiarise themselves with the requirements and undertake training within their company. At this stage, the Code covers initiatives that are currently in operation; however, this may change and it will be important that the business is aware of the requirements. AFGC will inform the contact person regarding any changes to the Code.
Companies must then ensure they have a mechanism for handling complaints, which may simply be integrated into their current complaints management system. Standards Australia provide guidance on complaint handling through the Australian Standard AS ISO 10002—2006. Further details are provided in the Code.
Companies must also have a mechanism for monitoring compliance, which may be incorporated into existing programs. Standards Australia provide guidance on compliance programs through the Australian Standard AS 3806—2006. Further details are provided in the Code.
Companies will also be encouraged to promote their commitment to the Code to their customers, such as through details on their website. Return to top of page.
What’s the complaints lodgement and handling process?
Complaints from a consumer or company must, in the first instance, be directed to the company against which the complaint is being made. Companies are encouraged to develop a complaint handling procedure for the Code, which may be integrated into their current complaints procedure.
In the event that the complainant is not satisfied with the response from the company they may lodge the complaint with the Code Manager. Complaints will initially be assessed to determine whether a breach has occurred. If the complaint is to proceed, the Code Manager will determine the severity of the breach. If deemed to be a minor or moderate breach, the Code Manager will liaise with the company to initiate responsive action. No penalty is issued. If deemed to be a severe or repeated breach, the Code Manager will seek advice from the Complaints Committee on the necessary action to rectify the issue and appropriate sanctions. The company will be contacted for a response during this process.
To assist with reporting on the Code, a selection of signatories will be asked to provide details of complaints handled by them. Return to top of page.
Is there a transition period for which companies have time to comply?
Because the Code is currently based on three initiatives already in place, companies should not be deviating too much from these already. However, the Code does allow for a two year transition period for companies that need to update their labels and promotional material accordingly. This transition period will be reflected in the compliance monitoring and complaints handling process. Return to top of page.
What will be the cost to industry?
There are no direct costs to industry through becoming a signatory. Companies in most instances will have a complaints handling and compliance monitoring system in place.
Signing up to the Code will most likely result in benefits to companies, in the form of promoting their commitment to good labelling practice. A combined commitment with effective outcomes aims to reduce the need for full regulation that can place increased pressure on industry and stifle innovation. Return to top of page.
Are the details in the Code a guide or are they requirements?
Companies signing up to the Code are demonstrating their commitment to the Code’s provisions, which are requirements for them to follow. The language in the Code reflects this requirement. Return to top of page.
How does the Code interact with non-signatories?
The Code intends to cover as much of industry as possible and it will therefore be important for the Code Manager to promote the Code and its uptake. This will be undertaken during the two year transition period.
Companies that are not signatories to the Code are not bound by the provisions. However, if a company is found to be undertaking activities that are not in line with the Code, it is the responsibility of the Code Manager to inform them of the Code and obtain their support. Return to top of page.
How are complaints against non-signatories dealt with?
Complaints about non-signatories can be sent to the Code Manager in the first instance. These cannot be assessed officially for non-compliance against the Code; however, the company will be invited to amend their labels and/or promotional material and become a signatory. An option to the Code Manager is referral to the regulator if deemed to be in breach of mandatory regulations. Return to top of page.
Is the New Zealand food industry involved?
The New Zealand Food and Grocery Council has been consulted on the Code and their members are being encouraged to sign up. Obtaining their support will be a key focus in the two year transition period. Return to top of page.
What work is being undertaken to create consumer and industry awareness?
Communication strategies have been devised to guide activities in relation to creating industry and consumer awareness. These include industry webinars to ensure companies are aware of the Code and how it operates, and the provision of educational material. The Code Manager will provide assistance to companies on moving towards compliance with the Code. The aim is to ensure widespread uptake across the food industry.
A section on the AFGC website will provide details on the Code to industry and consumers - flyers and fact sheets will be available. Return to top of page.
What is the process for adding additional components?
The Code will commence with the three components. The intention is to put the framework of the Code into place and then monitor its operation and effectiveness, after which additional components can be added.
The AFGC Secretariat is responsible for determining which additional components should be included. These will be discussed with the Code Working Group and then later with the wider AFGC membership and Code signatories. Return to top of page.
Can the Code Manager be contacted prior to the finalisation of artwork?
The Code Manager is available to assist companies at any time, including prior to the finalisation of artwork to ensure their labelling complies. Return to top of page.
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