FOOD (LABELLING OF FREE-RANGE EGGS) AMENDMENT BILL

Committee Stage

In committee.

Clause 1.

The Hon. T.A. FRANKS: I rise to refresh council members' memories that I undertook to provide answers at clause 1 in committee to questions raised in the second reading debate, and I have those responses. I was intending to address those questions and provide answers to those questions raised and then move on to discussing my amendment.

In response to the Hon. John Darley's question, 'How many free-range egg producers are there in South Australia?', according to information I have received I can advise that of the 80-plus egg producers registered with PIRSA, 60 or so produce eggs labelled as free range. Of these, 38 are small-scale producers for small customers and roadside stalls, accounting for about 5 per cent of the market. Further, 22 or so producers are commercial scale, defined as being with more than 200 hens. Of these, 15 or so are what I would call genuine free range, stocking at 1,500 birds per hectare or less.

This means that there are currently seven producers in South Australia who are using the barnyard or barn systems, but are calling their eggs 'free range' on their labels, as they are currently legally allowed to do. This sector of the industry accounts for some 20 per cent of South Australian produced eggs. Of the approximately 420,000 hens in South Australia, therefore, around 150,000 or 35 per cent are genuine free range, produced at stocking densities of less than 1,500 birds per hectare. This bill is not about stopping these producers producing eggs tomorrow the same way as they do today; it may mean, however, that they do need to label them differently, that is, remove those words 'free range' from their cartons.

In response to the Hon. Kelly Vincent's questions of how this bill will interact with national food labelling standards and marketing, given that we operate in a national food market, this bill will require all eggs sold in South Australia that are labelled as free range to be produced at stocking densities of 1,500 birds per hectare or less. If interstate eggs comply, they can be labelled as free-range eggs and sold as such in South Australia. If they do not comply, they can still be sold here in this state but not labelled as free range.

'How will eggs from interstate be labelled?' was another of the Hon. Kelly Vincent's questions. The response I have received to that is that eggs from interstate, if produced at stocking densities of less than 1,500 birds per hectare, will be labelled as free range. Eggs produced in cage or battery systems, where hens are crammed into cages, with little more than an A4 piece of paper size space each, can and should be labelled as cage eggs. Whilst if they are neither cage eggs but produced at densities of greater than 1,500 birds per hectare, then they can be labelled as barn-laid eggs or barnyard eggs. This categorisation is in fact in line with what a number of genuine free-range producers I have consulted with have supported.

Information I have received from industry sources suggests that, whilst approximately 35 per cent of South Australian eggs are in fact genuine free range, and produced at stocking densities of less than 1,500 birds per hectare, the situation with eggs imported from interstate is quite different. I have been advised that less than 5 per cent of eggs from interstate, currently sold as free range, are indeed from genuine 1,500 birds per hectare or less free-range egg producers, and indeed mostly organic.

The vast majority, some 95 per cent plus, in fact come from barn and barnyard production systems that are misleadingly but currently allowably labelled as free range. It is this very situation that the government's voluntary code will not and cannot address, leaving genuine SA free-range producers at a competitive disadvantage. They will have the higher production costs compared with interstate barnyard producers who label their eggs free range, and they will have the added impost of having to pay towards the cost of administering the compliance, enforcement and monitoring of the government's voluntary code.

I reiterate that this bill is not about enforcing producers to change their methods of production or to reduce the number of eggs available, or to drive producers out of business or to drive prices up to unavoidable levels. It will, in fact, do the opposite; that is, it will assist genuine South Australian free-range producers to stay in business and prosper by ensuring that they do not face unfair competition from producers producing eggs at densities above that specified by the model code and, in my view, incompatible with appropriate animal welfare standards and incompatible with consumer expectations. I remind members that the ACCC has already ruled against the Egg Corporation's attempt to increase permissible stocking densities to 20,000 birds per hectare in the face of overwhelming consumer opposition.

The Hon. Kelly Vincent also asked: could this proposed law disadvantage SA free-range egg producers? The short answer is no for the reasons I have already given. Genuine producers will no longer be undermined by unscrupulous producers seeking to cash in on the consumer goodwill and willingness of ethically-minded consumers to pay a premium price for a product produced with higher animal welfare standards.

I do not expect that this will increase the cost of eggs in South Australia. Indeed, unlike the government's proposed voluntary code, producers will not be forced to shell out the extra money to pay to be part of a government certified scheme, while simultaneously other producers, including interstate producers, will still be able to label their eggs (potentially at a much higher density in barnyard/barn systems) as free range and not be subjected to this impost.

The Hon. Ms Vincent also asked: what is the expected cost of passing these laws in South Australia? There will be some relabelling required for companies that are currently selling eggs that are produced at stocking densities higher than the 1,500 hens per hectare. These eggs would no longer be able to be called free range, so companies which do produce the eggs at higher densities than the model code and which this legislation would allow for will have to put them in differently labelled cartons, and that may have some slight one-off costs for those particular producers. I do not expect this one-off cost to be a significant burden on the small number of producers it directly affects.

The Hon. Kelly Vincent also asked: will the cost point for free-range eggs increase if producers such as Days Eggs choose not to produce eggs at 1,500 hens per hectare? The response is: I do not expect that there will be a significant cost increase for genuine free-range eggs. As I have said previously, these genuine producers will not have to change anything about their operations as they are already in compliance with the legislation and there will be no change to their cost of production. In fact, it will be cheaper for them than it would be under the government's voluntary code, where they will be liable for the additional costs.

As far as the consumer's point of view goes, whilst there will not be a reduction in the overall number of eggs available, there may be a temporary reduction in the number of eggs available that are to be labelled free range; however, I am confident that the market will respond appropriately. If producers currently producing at higher than 1,500 birds per hectare wish to command the same premium price that genuine producers achieve and deserve, then they will have to adjust their production systems accordingly. If they do not wish to change their operations, that is also fine. They can keep producing eggs and label them something like 'barnyard' or 'barn laid' or, indeed, 'cage eggs', if that is more appropriate.

To reiterate, this bill will not see a reduction in overall numbers of eggs produced here in South Australia, and it will not see a proliferation of substandard eggs imported from foreign countries like the Philippines, as has been suggested by some in the media. Indeed, federal quarantine laws prevent this due to biosecurity concerns, so that is a complete furphy. It will not affect our state's food security and South Australian children will not go hungry for lack of affordable eggs.

A side effect of this legislation will be that it will be easier to prosecute unscrupulous producers who deliberately engage in egg substitution—labelling cage eggs as free range, for example—and profit from deceiving consumers by cashing in on consumer goodwill for ethically produced eggs produced with those higher animal welfare standards. I believe there is no such place for operators like those in this state, and I would be pleased to see those prosecutions given the support to be implemented. Indeed, the penalties in this bill will send a strong message of that kind; that is, unconscionable behaviour will not be tolerated and will be appropriately met.

The Hon. Russell Wortley also raised the concern that, under mutual recognition provisions, we could not prevent interstate producers from selling their eggs produced at stocking densities of greater than 1,500 per hectare in South Australia while still labelling them as free range. The legal advice that I have previously circulated to members from N.G. Rochow SC (formerly of Howard Zelling Chambers) states that this is not the case. For the benefit of members who have not had the opportunity to examine that advice, I will briefly repeat the relevant part of his advice, which notes as follows:

4. The potential challenges in contemplation involve questions of whether the Bill, if passed into law, would potentially infringe section 92 of the Constitution or be inconsistent with provisions of the Mutual Recognition Act 1992...[of the commonwealth]. There is also the question as to whether there is other federal legislation with which it may be inconsistent, and the extent of any inconsistencies be rendered invalid under section 109 of the Constitution.

He advises:

5. As discussed, I am conscious of the decisions of the High Court in Cole v Whitfield, Castlemaine Breweries and Betfair concerning what constitutes reasonable regulations so as not to impose a burden on interstate trade that would render State legislation invalid under section 92. I am also conscious of the provisions of sections 9, 10 and 11, Mutual Recognition Act 1992...[of the commonwealth] and in particular paragraphs (a) and (b) of section 10.

6. On the reading I have been able to undertake of the bill and Ms Hamade's note:

6.1 I respectfully agree that there would appear to be no section 92 issue since the Bill imposes no burden on interstate trade but rather addresses the preconditions of claims that might be made at the point of sale;

6.2 I also respectfully agree that there is no apparent conflict with the provisions of sections 9, 10 and 11, Mutual Recognition Act 1992...[of the commonwealth] and in particular paragraphs (a) and (b) of section 10;

6.3 I consider that the proposed legislation is consistent with provisions of the Australian Consumer Law in that the Bill's requirements may be regarded as an articulation of the manner in which sale claims may be made in order to avoid their being otherwise misleading and deceptive, consonant with the intent of sections 18 and 29 of the Law.

He concludes:

...I do not currently consider that the Bill stands to be inconsistent with any relevant federal law for the purposes of section 109 or invalid under section 92 of the Constitution.

Members might also be aware that mandatory egg labelling legislation has already been implemented in the ACT, with their Eggs (Labelling and Sale) Act 2001, which clearly differentiates between cage, barn, aviary and free-range eggs and makes it unlawful for producers to sell eggs without labelling their products in accordance with these defined terms.

The legislation also makes it an offence to incorrectly label their products with identifying terms having to be 'conspicuously displayed' on the packaging and different production systems separated at point of sale into different sections or shelf space, with signage naming the production method and describing the method of production using those definitions.

It was also suggested by the Hon. David Ridgway that perhaps putting stocking rates on the cartons may be a better way to go. I would suggest (and I believe that the research conducted by consumer watchdog Choice confirms) that this further complexity does not benefit consumers. In fact, it may be counterproductive, with some consumers being confused by the numbers and assuming that higher numbers were, in fact, better.

The plethora of alternative labelling options in retail outlets from cage, cage free, barn laid, barnyard, free-range, open-range, organic, grain fed, range eggs, vegetarian, bred free range, biodynamic, eco-eggs, etc., is already confusing enough. What consumers want and deserve is legislative clarity that will assist them to make the choice appropriate to their circumstances. Such legislated clarity will also directly benefit South Australian producers and give us a marketing edge over our competition from other states. As the only state with a legislated limit, South Australian free-range eggs will become the gold standard that other states—I apologise for this; I did not write this—will scramble to catch up with.

A further side effect of the bill will be the improvement in animal welfare standards, as at the 1,500 birds per hectare density birds are much less likely to have their beaks trimmed and will be able to exhibit natural behaviours, such as spreading their wings, preening, foraging, dust bathing and perching. The successful passage of this bill would also put pressure on other states to follow suit and assist in the pressure for national uniform laws overall.

The other point I would like to finally address, which has been raised previously, is the situation in Queensland. Whilst Queensland did, in fact, specify 1,500 birds per hectare stocking density, this was only for birds on the outdoor part of the range. Well-placed industry sources advise me that this is why Queensland producers were content with that system for such a long time. They were able to have their cake and eat it too, producing at a higher stocking density whilst claiming a high moral ground of a legislated 1,500 birds per hectare limit, with the fine print revealing that, in fact, much higher densities were being utilised. With that contribution, I look forward to further debate during the committee stage.

Clause passed.

Clauses 2 and 3 passed.

Clause 4.

The Hon. T.A. FRANKS: I move:

Amendment No 1 [Franks–1]—

Page 2, lines 11 to 25 [inserted section 22A]—Delete the clause and substitute:

Amendment of section 22—False descriptions of food

Section 22—after subsection (2) insert:

(3) For the purposes of this Part, eggs produced by chickens are falsely described as free-range unless—

(a) the number of egg producing chickens kept or housed per hectare does not exceed 1,500; and

(b) any other requirement prescribed by the regulations has been complied with.

The amendment takes on board the concern raised by the Law Society with regard to the wording to be used and simply tightens that up. Members who may feel that this amendment no longer carries the penalty within the body of this bill should be aware that the penalties within the Food Act will come into play with the much neater wording of the amendment that I move.

The ACTING CHAIR (Hon. J.S.L. Dawkins): We are just clarifying something. The actual amendment that we have for the new clause 4 does not have the number 4 on it and we will need to note that. I just thought we would make sure the committee is aware of that.

Amendment carried; clause as amended passed.

Title passed.

Bill reported with amendment.

Third Reading

The Hon. T.A. FRANKS (17:23): I move:

That this bill be now read a third time.

Bill read a third time and passed.