The French origin labelling “test” initiative… or how to kill the Single Market!

Date:

The European Commission should respond before 5 July to a request by the French authorities to introduce a 2-year testing period for the mandatory origin labelling of meat and dairy products as an ingredient in processed foods in France. Concretely, this means a food manufacturer in France would have to indicate on the label of his products the origin of every single meat or dairy ingredient. If the Commission does not respond, it will be deemed to accept the French request and the “test” will be applied.

This would be a serious blow to the EU Single Market. Why?

The definition of the Single market is to allow free circulation of people, goods, capitals and services. How can “free circulation” be guaranteed if labelling requirements make it impossible to apply the same rules to national and other EU products? Food producers source their raw material from different EU countries in order to keep meeting high standards at a reasonable price, as consumers expect. A national initiative like this would only create additional burdens.

In 2014, the Commission issued a report on meat as ingredient in foods, based on an external study, which concluded that mandatory country of origin labelling in the EU does not appear to be an appropriate way forward. It based this conclusion on the fact that 1) consumers are not willing to pay for such information, 2) this would imply a considerable administrative burden, and 3) it would have a far-reaching impact, including on EU competitiveness and trade.

In 2015, the Commission issued a report on milk and milk as ingredient in dairy products, which concluded that voluntary origin labelling is the only way to go. It stressed that mandatory origin labelling would have a negative impact on consumer prices, supply chains, trade and competitiveness.

Now is the time to be coherent!
 

What does this “test” actually mean?

Let’s take an example in the meat sector:

A medium-sized food company located in the East of France buys the meat it uses for its “patés” from France and from Belgium or the Netherlands, in turn, depending on the price, the availability, the quality….

With the “test” regulation, this company would have to:

Have at least 8 different sets of labels printed, depending on the country it buys from
Change its labels or its packaging every time it changes provider
Interrupt its production chain every time it uses a new batch of meat and change its labelling
Or have different production lines depending on the origin of its meat
Separate the batches of meat based on their origin during transport and when stocking them in warehouses
Modify its production practices in order to avoid mixing batches of meat of different origins
Comply with additional traceability requirements

And now imagine:

The practical challenges created by these constraints
The quality issues (the company cannot mix different batches of meat even if it is to guarantee a certain characteristic of the product - level of fat contents for instance)
The costs incurred: operators estimate the cost at 0.6% of their turnover (€40 Mil.)

Looking at the dairy sector:

During a year of production, a French cheese manufacturer may be short of French cream, due to an ad hoc deficit. For a few weeks, the manufacturer may therefore have to get cream abroad, without knowing in advance where the cream will come from (the cream is bought in spot and the origins may vary). The percentage of the cream from abroad represents only a small part of the annual production of the company. Nevertheless the decree will prevent the manufacturer from labelling “origin : France” a product which is made with French cream most of the year. Could French brie not be labelled French anymore because some of its cream content originates from another EU country?
 

Concrete direct consequences:

Of course, if possible, the companies facing these problems would try to make it simpler by buying local (French) products, thus favouring protectionism.

If companies only buy raw materials from France, they avoid the constraints. But:

The companies they usually buy from in other Member States lose a significant client
There is no European competition any more
There is less choice of providers
The reduced choice in supplies means the company cannot guarantee an adequate level of raw material of the required quality at an affordable price. Nor can it ensure flexible supply sources if it has to meet unanticipated changes in demand. 
Prices are bound to increase
Consumers are penalised
Waste may increase too, due to frequent changes in packaging and less efficient supply chains

Conclusion:

This proposal is clearly a protectionist measure and the (beginning of the) END of the SINGLE MARKET!
This proposal is impossible to apply in practical terms for many companies, particularly smaller ones (9 in 10 of the 286 000 food and drink companies in the EU)
It would be very costly and price increases would most likely have to be passed on to consumers, who in their vast majority are not ready to pay more for their products.
While the Commission is clearly under a lot of political pressure to allow France the opportunity to ‘test’, allowing this “test” would create a clear precedent and open Pandora’s box not only in the food and drink sector but also for many other industries and lead to the dismantling of the EU market.
It would also be going against the Commission’s own reports which concluded that mandatory origin labelling of meat and milk as ingredient in foods would cause considerable problems in the market.

FoodDrinkEurope therefore urges the European Commission to carefully consider the consequences of its decision when answering the French request or any other similar proposal from other Member States, e.g. Italy.
 

A bit of regulatory background:

Food producers provide origin labelling on a voluntary basis if there is consumer demand, where consumers are willing to pay for this information, and, importantly, when it is operationally feasible. FoodDrinkEurope urges the Commission to speed up the work on Article 26(3) of the Food Information to Consumers Regulation, which sets rules for cases where the origin of the primary ingredient is different than the origin of the food.

Under the Food Information to Consumers Regulation (1169/2011), Member States are allowed to adopt national rules on mandatory origin labelling, but “only where there is a proven link between certain qualities of the food and its origin or provenance.” In that case, evidence should be provided “that the majority of consumers attach significant value to the provision of that information”. To date, this information has not been shared publicly.