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State of origin

Posted on : 14 July 2016


When legislation shifts, the motives behind the move can vary. Sometimes, the impetus is political; on occasion, it’s financially pragmatic; and in rare instances, change is just plain sensible.

According to the head of media at consumer advocates Choice, Tom Godfrey, new legislation, which makes country of origin labelling a requirement on most foods from July 1 2016, unequivocally falls into the latter category.

“Consumers want to know where their food is coming from. For a long time our country of origin laws were next to useless in helping identify the origin of the key ingredients you were purchasing,” he says.

Godfrey says the prime offenders were products labelled with phrases like “Made in Australia from local and imported ingredients”.

“They told you next to nothing about which country the products originated from. Clearly something needed to be done,” he says.

Once the new labelling laws kick in, Australian consumers will be able to tell at a glance where their food was grown, produced, made or packed. Labels will also convey the percentage of ingredients that come from Australia. The new system won’t impact everything, but most food sold in retail environments like supermarkets, markets or from vending machines will need to provide the information; and even though there’s a two-year grace period, many brands are expected to switch earlier.  

While Choice believes that the new system isn’t perfect, Godfrey says it is a positive move, noting that the new Product of Australia label, the Made in Australia from 100 per cent Australian ingredients tags, and the Grown in Australia labels are an improvement on the current system. However, he notes that one of the new options (the labels which will read something to the effect of Made in Australia with at least 25 per cent Australian ingredients are less helpful for consumers.  “That’s not helping you identifying where your ingredients are coming from,” he says.

Although experts like Godfrey believe the new labelling will help consumers, will it be good for agriculture? Well, probably, at least in the long term.

Dr Dean Wilkie is a Senior Lecturer at the University of Adelaide. He believes that before the new labelling makes a dent on most consumers’ buying habits, and in particular, improves things for Australian agriculture, other conditions will have to be met.

“Most grocery store purchases are habitual, so short term there is likely just to be a small shift,” Wilkie says.

He believes the potential for Australian producers to benefit from the shift will come mostly when one of two hypothetical market conditions are met.

“The first instance where buying locally produced products becomes of high importance is when the country of origin becomes a ‘shared issue’ between the brand and the consumer,” he says.

What’s a shared issue? A recession is one good example.

“This might spark the need to think locally. You’re seeing it in South Australia about the local economy now,” Wilkie says.

The second opportunity is intertwined with consumer perceptions: is the locally produced product seen as high quality? If so, there’s a segment of the market for whom that makes a difference – regardless of the category, “Australian made vitamins sell well in China because they are perceived as being of high quality,” says Wilkie.

For Wilkie, this is the learning producers should be taking on-board, “If you can produce fruit and vegetables…at a higher quality, this is the type of impact you can have,” he says.

Of course, when it comes to shifting buyer behaviour, not all consumers are moveable.  Recent government research on the topic of consumers’ attitudes towards country of origin labelling on food products found that while buying local is a factor for some, it’s by no means the whole story.

In fact, in terms of fresh food, researchers found price is the main driver for purchases (37%). Quality came second (28%), and country of growth for key ingredients placed third (18%). Consumers seem less concerned about where their fresh food is processed or packaged than where it’s grown - processing origins only interest eight per cent of buyers.

According to the CEO of the NSW Food Authority, Lisa Szabo, the wins for the agricultural industry will come to those who – through reputation of product or via marketing partnerships – tap into that 28 per cent of consumers concerned about quality.

“This group will buy Australian produce if they think it’s high quality, but equally they would purchase overseas products if they believe they are higher quality,” she says.

Still, overall, Szabo sees opportunities ahead for the agricultural sector, rationalising that the new origin labelling will give Australian consumers an easier time when they choose to follow their convictions, “If products hit the mark on price and quality and it’s clear they’ve been grown here, that all helps when it comes to making a purchase decision,” she says.

And even if it doesn’t impact the weekly shop in the short term; as Tom Godfrey from Choice points out, things can change in an instant the minute something goes wrong.
“It all came into sharp focus when the frozen berry fiasco broke. We had consumers from all over the country checking their freezers trying to work out the origin of the berries they’d purchased,” Godfrey says.

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