Luv-a-Duck to face court over ‘misleading’ claims

The Australian Competition and Consumer Commission (ACCC) has launched legal proceedings against duck processor, Luv-a-Duck, claiming its marketing is  misleading and deceptive.

The ACCC alleges that Luv-a-Duck engaged in false, misleading or deceptive conduct by use of one or more of the following statements on its packaging, website and brochures:

  • A statement that its ducks were ‘grown and grain fed in the spacious Victorian Wimmera Wheatlands’, and other promotional statements of a similar nature;
  • a statement that its ducks were ‘range reared and grain fed’.

Ducks processed by Luv-a-Duck, the ACCC claims, did not in fact have substantial access to outdoors.

ACCC commissioner, Sarah Court, said, "The ACCC's Compliance and Enforcement Policy lists credence claims as a new priority area, particularly those in the food industry with the potential to have a significant impact on consumers.

"Consumers must be able to trust that what is on the label is true and accurate. Businesses need to make sure they are not misleading consumers into paying a premium for products that don't match the claims made on the label," she said.

The matter has been filed in the Melbourne Federal Court's Fast Track List, with the first Scheduling Conference listed for 29 April, 2013.

Fellow duck producer, Pepe's Ducks, has also felt the wrath of the ACCC recently, taken to court for making similar claims about its 'open range' ducks. Earlier this year, the federal court ordered the company to pay $400,000 in penalties.

 

Growers and workers out of pocket after cannery closure

In the wake of Cowra's Windsor Farm Food factory going into voluntary administration, more than 70 workers have been sacked and local growers left shortchanged.

According to The Land, more than 70 workers have been sacked without pay this week and it's possible they won't receive worker entitlements as the business tries to avoid liquidation.

Grant Pogroske from the administrator, Grant Thorton Australia Limited, said the business can't afford to pay the farmers contracted to grow vegies for the plant.

"Unfortunately, unless they have actually delivered the goods, even though there is a contract in place at the moment, they are not going to be reimbursed unless whoever is going to take over is going to keep to those orders," Pogroske told ABC.

Pogroske said the administrator had been appointed to look at not just the Cowra cannery but also the head office and warehouse in Arndell Park.

"Unfortunately, it has been necessary to cease manufacturing and terminate the workforce without pay," Pogroske said.

"However, a number of key staff will be retained in order to complete specific orders and to undertake certain financial reviews."

Meetings with parties interested in the sale of the business are taking place, as well as discussions with employees, suppliers, customers and union representatives.

 

Coke chokes the NT container deposit scheme

 

A reported 10 billion drink containers are thrown away in Australia every year. Many of these are recycled, but many end up in landfill, on roadsides and in waterways.

The danger posed to wildlife by plastic waste is well documented, as is the life of non-biodegradable waste in landfill or the landscape. Beverage containers comprised 38% of the waste collected on the 2012 Clean Up Australia Day. Despite these containers being recyclable, they are still ending up in our urban and rural landscapes.

A heightened awareness of waste and recycling has put a strong public focus on container deposit legislation (CDL) schemes as a means of reducing the amount of glass, plastic and aluminium going into landfill or the landscape.

The basis of CDL is that consumers pay a refundable deposit on drinks sold in recyclable containers, and can redeem the deposit by returning the container to a range of points, including retailers and recycling depots.

South Australia instigated a CDL scheme in 1975 with a refundable deposit of five cents on recyclable drink containers. The deposit was increased to ten cents in 2008. Over a number of years other states and territories have investigated the application of the scheme and, in an effort to address waste in the Northern Territory, the Territory government passed their own CDL scheme in 2011.

Public approval of the CDL scheme in South Australia is very high, at around 98% and there is considerable and growing support for similar schemes in the other states.

The waste stats demonstrate the scheme’s success in reducing plastic and glass litter: the 2012 Clean Up Australia Day Rubbish Report shows that plastics made up just 28% of total rubbish collected in South Australia, whereas in NSW and Victoria, where there is no CDL scheme, plastics amounted to 38% and 34% respectively. Similarly the proportion of glass collected in SA was about half that collected in NSW and Victoria.

After the introduction of the Northern Territory’s CDL scheme last year, multinational beverage giant, Coca-Cola Amatil (CCA), announced that it would mount a legal challenge against the scheme. The reason provided by the company was that it didn’t want to see Territory households pay up to 20 cents extra for drinks when the deposit was factored in along with the administrative charges for the scheme.

Such concern for struggling families by one of the world’s largest corporate giants was touching, in the same way as a crocodile’s concern for a lone swimmer in a Kakadu waterhole is touching.         

As well as Coca-Cola and its diet variations, CCA also owns Fanta, Mountain Dew, Lift, Sprite, Mother, Powerade, Pump water, Mount Franklin water and the Kirks and Becks brand drinks. Its share of the Australian soft drink market is around 56%, as well as 45% of the sports drink market and 25% of the bottled water market. At stake is not the household budgets of Territorians, but the profit margin of the company if consumers respond to a price rise by buying less of the product.

The legal grounds for the challenge was the Commonwealth Mutual Recognition Act 1992. The Act was passed in order to ensure that goods and services are provided in all state and territory jurisdictions under the same conditions.

The federal court found that as CCA is selling drinks in containers, the drinks, and not just the containers, are subject to the ten cent deposit. Therefore, as other states – with the exception of SA whose CDL is exempt under the Act as it was in operation prior to the passage of the Act – do not have CDL, then the Northern Territory’s scheme places a condition on drinks sold in that jurisdiction that does not exist elsewhere.

In the wake of the court decision, industrial sabotage activist group, Out Of Order, responded by putting “Out of Order” signs on CCA vending machines in all capital cities. This action has the potential to affect CCA’s profit margin far more than the implementation of CDL in Australia’s least populous jurisdiction.

Flickr/GrahamIX

Coca-Cola Amatil is a multinational corporation with an annual trading revenue of around $47 billion. The Northern Territory has a population of 233,000 and a GDP of around $16 billion per annum.

The Territory’s CDL scheme is hardly going to make a dent in CCA’s profits and the company knows it. The legal case against the Northern Territory’s waste reduction scheme is more about sending a message to other Australian states that may be considering a similar scheme.

The company’s tactic, however, may come unstuck next month when, as anticipated, the Council of Australian Governments (COAG) begins steps towards adopting a plan for a nationwide CDL scheme that will see all states and territories introducing a similar scheme to that which SA has been using for four decades, thus removing the possibility for any legal challenge under the Commonwealth Mutual Recognition Act.

Robin Tennant-Wood does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

The Conversation

This article was originally published at The Conversation. Read the original article.

 

UK pie manufacturer fined £375,000 for safety breaches

Andrew Jones Pies, a west-Yorkshire based pie manufacturer which is now in administration, must pay £375,000 after a gas explosion killed one man and injured another.

The manufacturer was last month found guilty of health and safety breaches, with a judge at York Crown Court claiming it had "failed dismally."

According to foodmanufacture.co.uk, the judge said while the company isn't in a position to pay the fines, the charges reflect the manufacturers' failings.

The explosion occured in 2009 when baker, David Cole, tried repeatedly to light a 30 year old oven, unaware that gas was building up inside the baking chamber, eventually causing the door to blow off the oven and hit Cole, who was then trapped when part of the roof collapsed.

Cole died at the scene and another worker, Marcys Cartwright, was badly hurt.

The case is similar to one closer to home, with directors at Pokolbin's Drayton's Family Wines accused of failing to ensure the safety of their workers, following a 2008 explosion which killed two people.

Workcover NSW has launched criminal proceedings against the winery more than 18 months after a coroner found that poor safety measures were a major cause of the blast which killed winemaker Trevor Drayton and boilermaker Eddie Orgo.

 

Byron Bay Cookie Co crumbles, supplier: “I could smell a rat”

Byron Bay Cookie Company has confirmed to Food magazine that it has entered voluntary administration. Here, a very disgruntled supplier vents his spleen about his dealings with the now collapsed confectionery brand.

Ray Cranfield, managing director at Australian Packaging, said "We've been supplying to Byron Bay Cookie Company for a couple of years and have always had trouble with payments. The CEO Gordon Slater is a high profile orthopaedic surgeon rolling in money and having a good time and featuring in [the media] on a regular basis.

"The Australian Tax Office moved in earlier this week and said they had to attend court on 12 April to show reasons why they’re not paying their ATO accounts, and are not able to pay their suppliers. This morning they went into voluntary liquidation. I've been dealing with their financial controller over the last two weeks, trying to recover money, and I was promised the money, but the gentleman rang me a little while ago … and it doesn’t look like we’ll recover any of our funds," he said.

Cranfield said Byron Bay Cookie Company owes Australian Packaging $33,000 alone.

"We're chasing September 2012 accounts and we supplied to them up until November. We stopped supplying in December and then have been trying to negotiate.

"It's only been in the past two or three weeks that I personally have gotten involved. I'm the MD so I don't normally get involved in these bits and pieces but it's been going on this long and I could smell a rat," said Cranfield.

Cranfield said he threatened to take the company to court, and only last week was reassured that he would receive his payments.

"If a liquidator has been appointed there may be an opportunity for us to recover some trade … and be able to continue with them, but I suppose I'm more upset that he’s been ra-ra-ing his company in the media and other areas and saying how terrific the company is and how excited he is about his business, but he's taken a lot of Australian and overseas companies for their money. You get very angry about those sort of things," he said.

While Cranfield admits Byron Bay Cookie Company offers a top quality product that's highly recognisable in the Australian marketplace, he says CEO Gordon Slater doesn't understand how best to run a manufacturing business.

"I personally believe that the gentleman should remain as an orthopaedic surgeon and stop playing in manufacturing … [Byron Bay Cookie Company] is a major company selling over $10m worth of goods each year.

"Small companies like mine get hurt very, very badly when you take $33,000 off the bottom line. I've got to pay my employees tomorrow and I will because I'll most probably have to go into my private savings to do it. I bet this bloke's not doing that."

A statement sent to the media by Byron Bay Cookie Company reads:

John Vouris and Brad Tonks of the Business Recovery team at Lawler Partners were appointed Voluntary Administrators of Byron Bay Cookie Company Pty Ltd, being the manufacturing arm for the Byron Bay Cookie Group, on 7 March 2013 after a resolution was passed by its board of directors.

The Administrators will continue to trade the business with the support of employees, customers and suppliers.

The Administrators will also be working closely with the company’s stakeholders in preparation for the first meeting of creditors which will be held on Tuesday, 19 March 2013.

“We intend to trade the business and are working with the board, employees, customers and suppliers and are hopeful that a Deed of Company Arrangement proposal will be submitted that will maximise a return to creditors”, John Vouris said.

Jacqueline Schurig, the director of the company said “The Board has exhausted all avenues prior to making the decision to appoint Voluntary Administrators. The Board has the support of employees, customers and suppliers and is confident that the business has a future and sees this as an opportunity to restructure its manufacturing division. As such, it is the Board’s intention to propose a Deed of Company Arrangement”.

 

Cadbury accused of dodging $46m in taxes

Chocolate manufacturer, Cadbury, has been accused of avoiding $46m in taxes by misleading Indian authorities about production from a new factory in India.

In 2005, Cadbury set up a factory in India's Himachal Pradesh to take advantage of a 10 year 'tax holiday' that the country was offering companies that commence production by March 31, 2010, the Huffington Post reports.

It's alleged that Cadbury told Indian authorities it set up another plant next to an existing one in 2009, which should also be exempt from tax until 2019, however it turns out the second plant was operational by the scheme's cut-off date.

According to a Cadbury representative quoted in the Wall Street Journal, the expansion of the existing factory was misrepresented as the development of a completely new one.

Tax demand notices were sent to Cadbury and its executives in late February and it has a month to respond. Tax consultants have said that if it's established that the second factory became operational after 31 March, 2010, the confectionery giant will have to pay taxes, however it's expected that Cadbury will challenge the notice.

 

Horse meat scandal continues to spread

The recent horse meat scandal which has seen various meat products pulled from the shelves in Europe and the UK has spread to Asia, with an imported lasagne product recalled from shelves in Hong Kong’s ParknShop retailers.

Brands embroiled in the scandal include Nestle, Brazil’s beef producer JBS, British supermarket chain Tesco, and frozen food company Findus – the manufacturer of the lasagnes pulled from the shelves in Hong Kong and Europe.

Other countries to have pulled various products include Belgium, Britain, Denmark, Finland, France, Austria, Norway, Sweden, Slovenia, Germany and The Netherlands.

According to news.com.au, Hong Kong's Centre for Food Safety said the lasagnes "might be adulterated with horse meat which has not undergone tests for veterinary drugs.

"The product was removed from our stores last week following the government's instructions," a ParknShop spokeswoman told AFP.

Nowaco brand frozen ‘beef’ lasagne products in Tesco stores in the Czech Republic, have also been withdrawn after the horse meat was discovered.

The Czech Agriculture and Food Inspection Authority said it had found horse DNA in two samples of the Nowaco meals manufactured by the Tavola company in Luxembourg.

While horse meat is sold for human consumption in the Czech Republic, authorities have said the product’s labeling is misleading.

Spanghero, the French meat processing company at the centre of the controversy has been accused of passing off 750 tonnes of horse meat as beef, with horsemeat being found in 4.5 million "beef" products across Europe.

Earlier this week the company was allowed to resume production of minced meat, sausages and ready-to-eat meals, however it will no longer be allowed to stock frozen meat. According to news.com.au it also cannot act as middleman between slaughterhouses and food-processing companies – which is allegedly how Spanghero was able to change labels on horse meat from Romania and sell it as beef.

 

Beverage giants unite to oppose NT cash for cans

Three of Australia's biggest beverage manufacturers have united to oppose the Northern Territory's 'cash for cans' recycling scheme.

Usually fierce competitors, Coca-Cola Amatil, Schwepps and Lion Co have joined forces to oppose the scheme in Federal Court.

According to the AFR, the companies are arguing that the recycling scheme, similar to what's already operating in South Australia, has pushed beverage prices up and has failed in its environmental goals, with two out of three containers sold in the Northern Territory not being recycled – a statistic well below the national average.

The scheme involves a 10c deposit on drinks, which will be returned when the can is returned to a designated recycling agent.

Coca-Cola Amatil has said if they're successful in court, the company will reduce prices for NT retailers and work to refund consumers already hit with the deposits.

The Australian Food and Grocery Council (AFGC) is also opposed to the scheme, and said yesterday's Greenpeace protest outside CCA's Sydney office is another example of the environmental lobby trying to pull the wool over consumers' eyes.

Two Greenpeace activists were arrested yesterday after yielding a banner outside the Sydney office which displayed an image of a dead albatross with its cut-open stomach full of plastic. The sign read "Brought to you by Coca-Cola."

Earlier this month Coca-Cola was accused on hampering Western Australia's efforts to improve its recycling standards, with the Conservation Council of WA arguing the company is putting its profits ahead of community concerns. 

AFGC's CEO Gary Dawson said the scheme which Greenpeace and other environmental groups oppose so strongly will cost consumers at the checkout.

"All Australians need to know that the Council of Australian Governments has found the cost of this scheme will be up to $1.76 billion to the economy," he said.

"Industry wants more recycling and less litter and we have a plan to deliver it at no cost to consumers. That's the plan that Australia needs, not an inconvenient and costly drink container tax."

 

Vittoria Coffee wins trademark infringement case

Cantarella Bros, the owner of coffee brand Vittoria Coffee, has won a trademark infringement case, protecting their 'Oro' and 'Cinque Stelle' trademarks from further unauthorised use.

In what was the final chapter of a two year lawsuit, a coffee distributor, Modena Trading, owned by Ian Pagent who also operates a number of luxury car dealerships, was yesterday found to have used Vittoria's signs as trade marks.

Cantarella Bros filed proceedings in 2011, alleging that Modena Trading, the exclusive distributor for Caffe Molinari, infringed Cantarella Bros' rights by selling coffee under the 'Oro' and 'Cinque Stelle' brands.

Cantarella claims it has built these two trademarks into powerful sub-brands', and has produced million of packs of coffee bearing the trademarks.

However, Modena argued that the usage of both terms (which translate to 'gold' and 'five stars', respectively) was a commonplace way of portraying quality and was used by numerous Italian-style coffee traders, including Lavazza Coffee, reports BRW.

In handing down the decision, Justice Emmett said, "I am not persuaded by Mr Pagent's evidence that he believed that Cinque Stelle and Oro were being used on the Molinari products simply as an indication of quality … I am satisfied that the use by Modena of Cinque Stelle and Oro is use of those signs as trade marks.

"I have concluded Modena's use of Cinque Stelle and Oro constitute infringement of the Trade Marks.

"It follows from the findings and conclusions set out above that Cantarella is entitled to orders restraining future infringement of the Trade Marks by Modena," Justice Emmett said.

Vittoria CEO, Les Schirato, said he is disappointed that his attempts to resolve the matter out of court failed, but is determined to protect the Vittoria brand.

"We have been roasting coffee in Australia since 1958. Over that time, we have built a significant reputation and consumer trust, in all our trademarks. We are committed to protecting our intellectual property rights," he said.

It's not all good news for Cantarella, however, which failed in its claim for damages. According to BRW Modena was found not to have engaged in misleading or deceptive conduct, or for passing off their products as Cantarella's.

 

Heinz bought for $US28b

In what is being described as the biggest takeover deal in history, Heinz has been bought by 3G and American billionaire Warren Buffett for US$28b.

According to ABC the takeover has been approved by the Heinz board but shareholder approval is still pending.

The takeover equates to $72.50 per share, which is 19 percent higher than the previous all-time high.

Upon news of the sale, Heinz shares jumped nearly 20 percent to $US72.40, but dropped again after Buffett said he had no plans to raise his bid for the company, which has increased net sales over the past eight financial years.

Heinz has had a significant presence in the headlines this week, also making news for its proposed acquisition of infant food company, Rafferty's Garden.

The ACCC has raised concerns over the proposal, arguing that it would limit competition in the baby food market, of which Heinz has a 39 percent stake, reports AFN.

The brand is also considering legal action against outspoken entrepreneur, Dick Smith, who referred to Heinz's beetroot products as "poor quality."

Labels on Smith's Magnificent Sliced Beetroot read "When American-owned Heinz decided to move its beetroot processing facility from Australia to New Zealand causing hundreds of lost jobs, we decided enough is enough.

"So we are fighting back against poor quality imported product."

 

Drayton’s Family Wines directors accused of manslaughter

Directors of Pokolbin's Drayton's Family Wines are accused of failing to ensure the safety of their workers, following a 2008 explosion which killed two people.

Workcover NSW has launched criminal proceedings against the winery more than 18 months after a coroner found that poor safety measures were a major cause of the blast which killed winemaker Trevor Drayton and boilermaker Eddie Orgo.

The explosion occurred on January 17, 2008 when Orgo began welding a steel tank, unaware that it contained 9,000L of SVR, a spirit similar to ethanol.

The Herald reports that directors of the winery at the time of the blast, now facing negligent manslaughter charges, were Trevor Drayton's father Max and two brothers, Greg and John.

The three are facing fines of $165,000 or five years in prison, while the company could be hit with fines of up to $1.65m.

 

ACCC investigates supermarket duopoly amid bullying claims

Supermarket giants Coles and Woolworths are being investigated by the ACCC amid claims they bully food and grocery suppliers to force their prices down.

According to SMH, news of the ACCC's investigation following Wesfarmers confirmation that is has asked Coles executives to investigate accusations of wrongdoing when dealing with its suppliers.

"We are doing our own investigations and obviously the ACCC is doing its and we will just let it all unfold," Wesfarmers boss, Richard Goyder, said.

The SMH reports that under the promise of identity protection, approximately 50 suppliers have approached the ACCC with evidence of misconduct by the supermarket duopoly.

The ACCC's investigation will consider claims that the supermarkets impose penalties on suppliers that aren't part of the terms of trade, favour homebrand products, threaten to remove products from the shelves if extra payments or penalties aren't paid and fail to pay prices agreed with suppliers.

Claire Kimball, a spokeswoman for Woolworths, said "Woolworths has a very strong focus on ensuring its business dealings are fair and lawful."

If proven to be true, the allegations carry multi-million dollar fines.

KAP (Katter's Australian Party) federal member for Kennedy, Bob Katter, said the party has been putting pressure on the ACCC and its chairman Rob Sims for some time now, and is grateful for the competition watchdog's response.

“We are terrifically gratified and heartened that at least someone is trying for us. Every farmer in Australia now has a platform to voice their desperate plight," said Katter.

“The farmers of Australia have been beaten, battered and bullied by these supermarkets and now they will finally get the chance to tell their side of the story."

Katter called on every Australian farmer to write an anonymous letter submitting their support for ACCC's investigation.

 

Managing food recalls: a manufacturer’s guide

A product recall is a high impact event for any food business. It can be extremely costly and the reputational damage to a food business can be serious and long lasting if not managed correctly, report Michael Lincoln and Martin Stone.

What are the main causes for product recalls in Australia?
According to Food Standards Australia New Zealand (FSANZ) there are approximately five recalls per month in Australia and this figure has been steady over a number of years.

Approximately one-third of recalls are due to microbiological issues, one-third from labelling issues and one-third caused by physical and chemical contamination.

Looking at these sectors individually sheds more light on the risks:

  • Microbiological issues: nearly half of micro-based recalls are due to the presence of listeria (47 percent), followed by salmonella (20 percent) and then E. coli (12 percent);
  • Labelling issues: 90 percent of labelling recalls are due to undeclared allergens including peanut, gluten, milk and egg
  • Physical contamination: foreign matter recalls commonly involve metal (37 percent), plastics (27 percent) and glass (18 percent).

The risks that cause these recalls are present in almost every food manufacturing business and it is clear that no-one is immune from the threat of a product recall. An objective of all food businesses must therefore be risk minimisation and preparedness.

What are the key factors involved in risk minimisation?
The short answer is documented systems and actual procedures. Systems-wise, food businesses should have a robust food safety risk management program in place which needs to be constantly reviewed and tested to ensure it reflects the risk profile and activities of the business. As a minimum, the program should specially consider each of the causal factors in recalls and those specific to the industry itself.

Importantly, the actual procedures that occur within the business need to be critically evaluated. Significant failures in the food industry resulting in a recall rarely come from a problem with the food safety manual, they result from actual procedures that occur in the facility. HACCP often reviews businesses with lovely documented systems but the actual procedures in the facility fall way short of best practise or even basic common sense. The key here is to spend more time on the production floor and actively hunt down those practises that bring risk into your business. Eliminate these and you will effectively reduce risk.

What about preparedness?
Conducting routine mock recalls is a great way to test your ability to respond to a real life situation. Again, the tip here is critical evaluation. Really test your system to see if it all holds together. A surprising number of recalls occur when a number of factors contribute negatively to the effectiveness of a recall. For example, “the coder was not working that day”, “the logistics manager was on holidays”, “the retention samples were lost”, “it was from a new supplier” are comments we hear all the time when investigating a recall.

Use some of these ‘curved ball’ factors when you conduct your mock recall and see what happens. Does the effectiveness of your product recall hinge on one person or procedure in your business? Is there a back-up plan in place?

On the financial side, recall insurance can make sound business sense. This product is appropriate for many businesses and forms a vital part of their preparedness programme.

What should a company do if it finds itself in a recall scenario?
Firstly, don’t panic. The key activities in the early part of a recall are containment / stock disposition and information gathering. Focusing on these and doing it well will minimise impact. Identifying potentially affected stock rapidly and halting logistics quickly can make the difference between a consumer recall and a trade withdrawal. Accurate information is vital to decision making – any assumptions in this process will reduce the effectiveness of the overall recall.

Accuracy in determining the problem significance is also critical and again, assumptions have no place. We have seen numerous examples of product recalls being triggered on the basis of potentially false positive results, for example. The opposite could also be true with potentially disastrous results for consumer safety. Whilst it is wise to always err on the side of consumer safety, there is nothing better than being able to make decisions based on sound, repeatable data.

Let me give an example of a friend who was recently making an assessment of laboratory capabilities for his company. A single sample was divided into four parts and sent to four individual laboratories. Three significantly different results were returned (only two of the four labs found the same results). One of the results could have triggered a product recall if taken on its own. The outcome here was that at least two of the results were likely wrong, maybe three, maybe all.  The implications in a product recall scenario are obvious.

Finally, the regulators including FSANZ and State Recall Co-ordinators are a huge resource for the food manufacturer when enacting a recall. The recall co-ordinators provide guidance and help the manufacturer to navigate their way through the formalities. Their advice is invaluable but note, the depth of their assistance is limited by the strength of the information provided by the manufacturer.

What costs are associated with recalls?
The cost of these incidents can be startling. We often see recall costs from retailers costing over $100,000, and it is not uncommon to see the total cost of a recall exceeding $500,000. Only recently we had a client with a turnover of less than $15m have a recall cost in excess of $1m.  A recall is rarely a cheap experience and can easily cause long term financial pain.

We are also seeing an increase in clients who contract manufacture to third parties being lumped with significant bills for loss of sales and extra expenses from the third parties following a recall. These types of bills can be multiples of what the client's costs are.

A food recall is a potentially costly and devastating event for a food business, with serious implications for consumer health. However, the risk and impact of a food recall can be significantly reduced through the use of critically evaluated systems, being appropriately prepared and taking the right to mitigate the effects if one of your products is pulled from the shelves.

 

Michael Lincoln is National Underwriting Manager, Crisis Management at Liberty International Underwriters www.liuaustralia.com.au

Martin Stone is director at HACCP Australia. www.haccp.com.au

For promotional purposes only. The information contained herein should not be considered legal advice or loss control or prevention advice. This information is intended to provide general information only. You should not act on the basis of information contained within this communication without first obtaining specific professional advice.  Insurance coverage is subject to the terms and conditions of the policies as issued. Whether or to what extent a particular loss is covered depends on the facts and circumstances of the loss and the terms and conditions of the policy as issued and the risks involved. This information is current as at 7 January 2013.

 

Pepe’s Ducks fined $400,000 for false claims

The Federal Court handed down its decision late last year on the Pepe’s Ducks ‘open range’ saga, ordering the company to pay $400,000 in penalties.

The company will pay $375,000 in civil penalties and $25,000 in legal costs.

The court also laid down the following orders:

  • Pepe’s Ducks may not use the phrases ‘open range’ or ‘grown nature’s way’ on its packaging, website, vehicles, signage, stationery or merchandise for the next three years.
  • The image of the 'open range' duck may not be used for a period of three years unless it is accompanied by the phrase 'barn raised.'
  • It must implement a trade practices compliance program by February 1, 2013 and maintain it for three years.
  • The company must feature corrective notices on its website and premises, and provide them to its customers.

The case arose back in July 2012 when activists captured footage of the so-called 'open range' ducks living in crowded, dirty pens, with many suffering poor health. 

The ACCC subsequently filed a writ in the Federal Court, accusing the company of false advertising, objecting to its use of the slogan 'grown nature’s way' and its logo that contains the image of a duck out in the open, walking towards a lake amidst a mountainous backdrop.

A press release published on the ACCC website reads “the ACCC welcomes the Court orders and notes that this decision continues its focus upon protecting consumers from misleading statements regarding food production methods.”

Pepe's Ducks slaughters over 70,000 ducks each week, and is one of the country's largest suppliers of duck meat.

 

Mixed reaction on new health labelling laws

The Legislative and Governance Forum on Food Regulation has approved proposals to regulate food manufacturers' products nutrition content and health claims.

These new regulations will create stricter controls over on-pack health claims, including the need to provide scientific evidence to support claims and meet specific eligibility criteria including nutrition criteria.

The move came on the same day the Gillard Government announced a range of measurers to bolster the strength of Australia's manufacturing sector – promising the first round of the $236 million Industrial Transformation Research Program will focus on food research.

Meeting in Brisbane on Friday the various ministers considered the review report for the draft Standard for Nutrition, Health and Related Claims provided by the Board of Food Standards Australia New Zealand, and agreed to enact new laws early next year that will regulate the voluntary use of nutrition content and health claims, general level health claims, and high level health claims.

These changes will force manufacturers to have health claims such as 'calcium is good for strong bones' to be supported by either pre-approved or industry self substantiated, while the higher level health claims, such as 'calcium reduces the risk of osteoporosis' will require pre-approval by Food Standards Australia New Zealand (FSANZ).

"All health claims will be required to be supported by scientific evidence and will only be permitted on foods that meet specific eligibility criteria, including nutrition criteria," the ministers said.

"The new Standard aims to ensure that consumers can have confidence that health claims are evidence based.
"When gazetted, food businesses will have three years to meet the requirements of the new Standard."

During this three year grace period FSANZ will carry out additional work such as the refining of the nutrient profiling scoring criteria, and the development and implementation of processes to maintain scientific currency of pre-approved food-health relationships.

Industry support

The new regulations have been supported by CHOICE, which stated that the decision, and the nutrient profiling score, is positive for consumers and helps to provide an objective benchmark for food healthiness.

“These nutritional criteria were agreed following extensive work by the independent regulator and provide a robust and objective approach to determining which food products are healthy enough overall to carry health marketing claims,” CHOICE spokesperson Ingrid Just said.

Following the announcement Uncle Toby's will move to ensure all of its 44 breakfast cereals meet the new criteria.

The manufacturer explained that it is part of the company's wider five year plan to reduce fats, sugar, and sodium in its products.

"Today, we are committing to consumers that by the end of January our entire range of UNCLE TOBYS cereals will meet the nutrition eligibility criteria of the new standard, meaning that every one of our cereals could carry a health claim,” Uncle Toby's nutrition manager Nilani Sritharan said.

Falling short

Despite agreeing with the move, CHOICE felt that the decision to allow food manufacturers to evaluate the evidence behind the health claims, as opposed to independent regulators, damages consumer confience.

“This is a major step backwards from an earlier proposal that would have required the independent regulator to scrutinise new claims, which was scuttled after an intense industry lobbying campaign,” Just said.

“When we look at what happened in Europe, where the European Food Safety Authority rejected 80% of the health claims put forward by food companies, we can see that the food industry has a very different idea of what constitutes scientific evidence to independent regulators."

The backlash

However the move by the government group has not been universally welcomed.

The Australian Food and Grocery Council (AFGC) was quick to slam the new regulations, claiming that it "will stifle innovation and industry competiveness".

"Today’s decision by the Legislative and Governance Forum on Food Regulation to impose additional regulation on nutrition content and health claims will result in unnecessary costs, discourage innovation and reduce trade competitiveness of the food processing sector," it said.

AFGC chief Gary Dawson decried the new regulations as regressive step, saying that "the Australian food processing industry needs policy reform that bolsters business competitiveness. Unfortunately the Commonwealth and the majority of members of the Forum on Food Regulation have ignored the advice of the AFGC and those states representing the bulk of the food manufacturing sector.

“The new Health Claims Standard is a disproportionate response to a non-issue that will discourage innovation in food products, increase regulatory costs, discourage investment and ultimately pose a competitive disadvantage for domestic manufacturers."

He went on to say that “this decision comes just two days after the Government announced its commitment to reduce red tape and review unnecessary regulation. It is also inconsistent with the broader policy emphasis on reshaping the manufacturing sector to take advantage of the Asian Century.

“In the current difficult trading environment any additional regulation or impost that adds to costs runs a high risk of pushing production and jobs offshore.

“Instead of streamlining approvals, the new standard will impose an onerous substantiation process that goes well beyond equivalent regulation in Europe or US.”

On the sidelines

While the main focus was on the new health and nutrition claims, the food minister also noted progress for labelling across a number of different areas.

Regarding front of pack labelling, the ministers said the collaborative process to develop a new rating system has progressed well.

They also noted that the review of the Policy Guideline on the Addition of Caffeine to Foods is underway, with public consultation on the Policy Guideline scheduled for March next year.

The agreement for an Australian standard on country of origin labelling to include all unpackaged meat products was welcomed by CHOICE.

“We know Australian consumers have a strong desire to know where their food is produced, and this is a welcome move to close one of the key country-of-origin loopholes,” Just stated.

Minister at the forum also sought to push a review on the proposed standard for low THC hemp as a food, with ministers to seek advice from the Standing Council on Police and Emergency Services.

Mixed reaction on new health labelling laws

The Legislative and Governance Forum on Food Regulation has approved proposals to regulate food manufacturers' products nutrition content and health claims.

These new regulations will create stricter controls over on-pack health claims, including the need to provide scientific evidence to support claims and meet specific eligibility criteria including nutrition criteria.

The move came on the same day the Gillard Government announced a range of measurers to bolster the strength of Australia's manufacturing sector – promising the first round of the $236 million Industrial Transformation Research Program will focus on food research.

Meeting in Brisbane on Friday the various ministers considered the review report for the draft Standard for Nutrition, Health and Related Claims provided by the Board of Food Standards Australia New Zealand, and agreed to enact new laws early next year that will regulate the voluntary use of nutrition content and health claims, general level health claims, and high level health claims.

These changes will force manufacturers to have health claims such as 'calcium is good for strong bones' to be supported by either pre-approved or industry self substantiated, while the higher level health claims, such as 'calcium reduces the risk of osteoporosis' will require pre-approval by Food Standards Australia New Zealand (FSANZ).

"All health claims will be required to be supported by scientific evidence and will only be permitted on foods that meet specific eligibility criteria, including nutrition criteria," the ministers said.

"The new Standard aims to ensure that consumers can have confidence that health claims are evidence based.
"When gazetted, food businesses will have three years to meet the requirements of the new Standard."

During this three year grace period FSANZ will carry out additional work such as the refining of the nutrient profiling scoring criteria, and the development and implementation of processes to maintain scientific currency of pre-approved food-health relationships.

Industry support

The new regulations have been supported by CHOICE, which stated that the decision, and the nutrient profiling score, is positive for consumers and helps to provide an objective benchmark for food healthiness.

“These nutritional criteria were agreed following extensive work by the independent regulator and provide a robust and objective approach to determining which food products are healthy enough overall to carry health marketing claims,” CHOICE spokesperson Ingrid Just said.

Following the announcement Uncle Toby's will move to ensure all of its 44 breakfast cereals meet the new criteria.

The manufacturer explained that it is part of the company's wider five year plan to reduce fats, sugar, and sodium in its products.

"Today, we are committing to consumers that by the end of January our entire range of UNCLE TOBYS cereals will meet the nutrition eligibility criteria of the new standard, meaning that every one of our cereals could carry a health claim,” Uncle Toby's nutrition manager Nilani Sritharan said.

Falling short

Despite agreeing with the move, CHOICE felt that the decision to allow food manufacturers to evaluate the evidence behind the health claims, as opposed to independent regulators, damages consumer confience.

“This is a major step backwards from an earlier proposal that would have required the independent regulator to scrutinise new claims, which was scuttled after an intense industry lobbying campaign,” Just said.

“When we look at what happened in Europe, where the European Food Safety Authority rejected 80% of the health claims put forward by food companies, we can see that the food industry has a very different idea of what constitutes scientific evidence to independent regulators."

The backlash

However the move by the government group has not been universally welcomed.

The Australian Food and Grocery Council (AFGC) was quick to slam the new regulations, claiming that it "will stifle innovation and industry competiveness".

"Today’s decision by the Legislative and Governance Forum on Food Regulation to impose additional regulation on nutrition content and health claims will result in unnecessary costs, discourage innovation and reduce trade competitiveness of the food processing sector," it said.

AFGC chief Gary Dawson decried the new regulations as regressive step, saying that "the Australian food processing industry needs policy reform that bolsters business competitiveness. Unfortunately the Commonwealth and the majority of members of the Forum on Food Regulation have ignored the advice of the AFGC and those states representing the bulk of the food manufacturing sector.

“The new Health Claims Standard is a disproportionate response to a non-issue that will discourage innovation in food products, increase regulatory costs, discourage investment and ultimately pose a competitive disadvantage for domestic manufacturers."

He went on to say that “this decision comes just two days after the Government announced its commitment to reduce red tape and review unnecessary regulation. It is also inconsistent with the broader policy emphasis on reshaping the manufacturing sector to take advantage of the Asian Century.

“In the current difficult trading environment any additional regulation or impost that adds to costs runs a high risk of pushing production and jobs offshore.

“Instead of streamlining approvals, the new standard will impose an onerous substantiation process that goes well beyond equivalent regulation in Europe or US.”

On the sidelines

While the main focus was on the new health and nutrition claims, the food minister also noted progress for labelling across a number of different areas.

Regarding front of pack labelling, the ministers said the collaborative process to develop a new rating system has progressed well.

They also noted that the review of the Policy Guideline on the Addition of Caffeine to Foods is underway, with public consultation on the Policy Guideline scheduled for March next year.

The agreement for an Australian standard on country of origin labelling to include all unpackaged meat products was welcomed by CHOICE.

“We know Australian consumers have a strong desire to know where their food is produced, and this is a welcome move to close one of the key country-of-origin loopholes,” Just stated.

Minister at the forum also sought to push a review on the proposed standard for low THC hemp as a food, with ministers to seek advice from the Standing Council on Police and Emergency Services.

NZ dairy farmers fined for discharging effluent

A dairy farm in New Zealand's Bay of Plenty has been fined $74,000 for discharging effluent into a waterway – the company's second such fine in 18 months.

Riverlock Farms and its directors Ian and Geoffrey Brown were found guilty of three charges: pumping underpass water containing effluent into a tributary of the Waioeka Stream, effluent flowing into the same tributary when an effluent pond overflowed and failing to comply with a court order to obtain a report about the farms contingency plans for effluent management.

Stuff.co.nz reports that the same company was last year convicted and fined $40,000 for discharging effluent from a pond and also from an irrigator where it could enter a waterway.

The most recent charges occurred just three months after the initial conviction.

Chairman of the council’s operations, monitoring and regulation committee, Malcolm Whitaker, said the level of the latest fine reflected the deliberateness of the discharges.

"A conviction on the breach of this previous enforcement order was necessary as the need to comply with a Court ordered direction is imperative. The company has spent in excess of $330,000 on upgrading their effluent system on the farm which was reflected by the Council not seeking a fine for that particular offence," he said.

Milking about 2,500 cows, Riverlock Farms is one of the largest farming operations in the Bay of Plenty.

 

Staff at Melbourne food plant claim extreme bullying was ignored

Staff at a Melbourne gourmet food manufacturing facility, which provides food for Ikea, Qantas and Costo have allegedly suffered extreme bullying at the plant.

More than half the workers employed at the Glendal Foods factory in the inner-city suburb of Brunswick say they have been bullied for years, and despite informing management and a trade union, the allegations were never followed up, The Age reports.

Of the 38 staff employed at the plant, 18 say they have been bullied by their employer, and one allegedly harmed herself two weeks ago as a result of the treatment.

She was admitted to the Western Hospital as a result and doctors there contacted WorkSafe to become involved.

An investigation is currently being conducted into the incident by the work safety authority.

Another staff member has alleged that a heavy trolley was pushed into her stomach while she was pregnant.

Most of the staff speak little English, and since their concerns have allegedly been ignored, they have decided to go public with their story.

They say the inappropriate treatment has been going on for at least six years.

The workers allege that management at the factory had allowed a senior staff member to regularly yell at them and make sexual and personal comments, tell workers they needed to give 48 hours' notice if they wanted to take sick days and demand staff work overtime on any day, without any notice.

They were also told, when they went from casual to full-time workers, they must ''celebrate'' by buying lunch for the entire workplace, or buying a supervisor a gift.

Employee Hiep Nguyen said when she was given a full-time job with the company, she was instructed to shout the entire factory lunch, because ''it was the rules,” and would face termination if she did not.

''I am a new arrival,” she said through an interpreter.

“I came to Australia legally.

“I work, and pay tax and try to be a good citizen.

“But because I have really limited English, I don't know a lot of rules.

“And for someone who has been here a bit longer than me to make my life really difficult is not fair for me.”

It is also alleged they were banned from making any contact with the company's owner and wages of some employees were withheld for up to eight weeks.

Most of the bullying complaints are against one supervisor, Van Phan, who the staff allege, pressured most of them to pay her 10 per cent of a backpay payment made to them in July after they signed a new workplace agreement.

They apparently had to make the payment in cash, and while Phan wouldn’t discuss the other allegations on Friday, she did say employees who gave her a cut of their backpay had given it as a gift.

''They were happy to do that,'' she said.

When the union became involved in the case, the company asked Van to voluntarily pay back this money, but it is unclear whether this has occurred.

Very few of the Glendal Foods employees were members of the National Union of Workers until August, when Nguyen filed a complaint with the union.

She also contacted the federal government's Fair Work Ombudsman, which referred her to WorkSafe.

Qantas and Ikea have confirmed that Glendal Foods is one of their suppliers,  among their suppliers but would not comment further.

Glendal Foods, which makes samosas, filo pastries, soups, curries and casseroles for its clients, is owned by Melbourne chef Chandra Kanodia, and the staff all allege he was aware of the incidents in the plant, but he ignored it.

He declined to discuss the allegations, but did comment on the fact that WorkSafe is investigating.

''WorkSafe will take care of this; the allegations are going to be sorted out by them,'' he said.

When asked why so many of his staff had complained of bullying, he said: ''They are all union members, are they? That says something, don't you think?''

He later issued a brief statement saying his company was concerned about the matter and taking it very seriously.

National Union of Workers organiser Monique Segan, who has regularly met staff at Glendal Foods since August, said the bullying was some of the most extreme the union has seen.

She also said that raising the issue Glendal Foods had increased problems, pushing the workers to go public with their story.

Authorities pledge continued commitment to sheep in Pakistan

The Australian Department of Agriculture, Fisheries and Forestry (DAFF) and the Australian High Commission in Pakistan have pledged to continue their involvement in resolving the large consignment of sheep being held in Karachi.

News of the inhumane treatment of the sheep in Pakistan first broke last week, evoking memories of the infamous Four Corners story this time last year, which led to Prime Minister Julia Gillard banning live export to Indonesia.

In that case, sheep were shown in video footage to be distressed and brutally murdered.

The latest Pakistan incident led to the culling of Australian livestock in Pakistan being formally suspended on 22 September after the importer successfully applied for a court order to prevent the cull from continuing.

Video has emerged of thousands of Australian sheep being brutally culled in Pakistan, with the animals being clubbed, stabbed and buried alive.

The 21,000 sheep arrived in Karachi earlier this month after being given a clean bill of health by both Pakistan and Australian government officials.

However, local authorities ordered the culling, stating the animals had salmonella and anthrax.

Agriculture Minister Joe Ludwig said that while his department would conduct a full investigation in to the incident, he insisted the live export program works well and would continue.

The DAFF said it is aware of, and is looking into, the adverse reports regarding culling practices in Pakistan, and will continue to be actively involved in the case.

On 28 September the High Court of Sindh in Pakistan adjourned delaying its decision on an application by the Pakistan importer, PK Livestock, to overturn a cull order from the Sindh Livestock Department. 

The intention of the delay is to allow further testing and diagnostic analysis to be conducted by an independent also ordered PK Livestock to continue having full and unhindered access to the sheep to ensure they are adequate cared for.

This encompasses ensuring the supply of feed, water and veterinary medicines, which will be done in collaboration with Australian exporter, Wellard Rural Exports.

Wellard Rural Exports reports that the sheep, exported under the new Exporter Supply Chain Assurance System (ESCAS), are in good condition, have access to feed and fresh water and display no signs of disease.

Australian livestock exporters responsible for ensuring they meet the requirements of ESCAS, which stipulates exporters must ensure that livestock will be handled in accordance with internationally accepted World Organisation for Animal Health (OIE) standards up to and including the point of slaughter.

Previously, Wellard Rural Exports self-reported a loss of control over their supply chain in Pakistan when local Sindh authorities entered the facility and commenced culling of sheep under an order issued by the Sindh High Court.

Both the importer and Wellard representatives were ordered by local authorities to leave the facility during that time.

DAFF says it will conduct a full investigation of the ESCAS non-compliance and continue to provide further information as it becomes available.

Nestlé loses appeal against Cadbury’s purple

Food giant Nestlé has lost its court battle with Cadbury over the colour purple.

The UK High Court did not uphold Nestle’s appeal that has gone on for four years.

In 2008, Cadbury, which is now owned by Kraft Foods, won the right to exclusively use the particular purple colour Pantone 2685C, the colour used Dairy Milk packaging.

Nestlé challengeed a ruling from December 2011 that covered chocolate bars and drinks., arguing that colours could not be protected as a trademark.

Judge Colin Birss did not agree, ruling yesterday that colours are "capable of being signs."

He determined that the "Cadbury purple" had become synonymous with the company's chocolate for more than 90 years.

"The evidence clearly supports a finding that purple is distinctive of Cadbury for milk chocolate,” he said.

The original ruling from the Intellectual Property Office found sufficient evidence Cadbury had used the colour since first making Dairy Milk in 1914.

But since the trademark did not cover chocolate cakes or assortments, Nestlé's boxes of Quality Street contain the brazil nut chocolate wrapped in the purple colour, which has been a bone of contention between the two confectionary makers.

What do you think of the ruling? Do you agree that colours should be trademarked?