NZCPR-Weekly: Does the Food Industry Need New Regulation?
CIR UPDATE...
*Thanks to those of you who are raising awareness of our Citizens Initiated Referendum through your local newspapers and
radio stations - every bit of publicity helps!
*To succeed in our referendum we need 320,000 signatures - that's equivalent to the combined population of Wellington
and Hamilton! We need to tell as many New Zealanders as we can about our CIR, so they can get behind it and help. With
that in mind, here is the start of an email message that I am hoping you will send on to your contacts, so that they can
send it on to theirs and so on. If you click "More" below, it will take you to the full message, which you can simply
copy into a new email, add addresses and send - urging recipients to send it on of course!
Dear friends,
Would you please consider forwarding this message to the contacts in your address book since it contains crucial public
interest information that everyone should be aware of.
A group of concerned New Zealanders are gathering signatures for a Citizens Initiated Referendum to restore Crown
ownership of the foreshore and seabed and I am hoping you will support their efforts. More
__________________________________________________
THE NZCPR BLOG...
Breaking Views
* Gary Judd: Arresting a Dangerous Decline
* Frank Newman: Interest rate decision becoming clear
* Steve Baron: Council Rates System Unfair & Inequitable
* Mike Butler: Ninety Mile Beach tribe accepts $23.7m to end complaints
__________________________________________________
THIS WEEK...
DOES THE FOOD INDUSTRY NEED NEW REGULATION?
The Department of Trade and Industry describes the food and beverage industry as the “lynchpin of New Zealand's
prosperity”. Representing a half of all New Zealand's merchandise exports by value, the industry has a “crucial
influence on our economy”.
In his first major speech of 2012, Prime Minister John Key also highlighted the importance of food production to our
national wellbeing: “Looking ahead, I am very confident about New Zealand's prospects. There are huge opportunities out
there for New Zealand. We are a food-producing country in a world that is demanding more high-quality food. A growing
middle class in China, India and across Asia is tuning in to the goods and services New Zealand can supply.”
With that in mind, the total revamp of the food industry that will take place under the government’s proposed new Food
Bill, is an important issue for the country. This is legislation that was instigated in 2003 by a Labour government that
was obsessed about regulating food, having poured hundreds of millions of dollars into a wide range of initiatives from
policing school tuckshops to fast-tracking obesity reduction measures. However, given the country’s dismal experience of
two other sweeping reforms that were prepared by former Labour governments to be passed by National (namely the hugely
problematic Child Support Act and the Resource Management Act) additional care is surely called for regarding the Food
Bill – especially as New Zealand already suffers from an over-abundance of stultifying rules and wealth-destroying
regulations.
The food industry, which consists of 35,000 food businesses along with 200,000 part-time food traders, provides 1 in 5
New Zealand jobs. It is one of our most innovative sectors, which the growing popularity of Farmers Markets
demonstrates, with their promise of fresh foodstuffs direct from grower to consumer. Successful entrepreneurs who
produce world class foods and beverages - like Charlie’s Orange Juice or Lisa’s Hummus - often start in a family
kitchen.
The Food Bill has been sitting on Parliament’s Order Paper since 2010 when it was reported back with unanimous
cross-party support from a Select Committee, having attracted only 66 submissions.[1] As it stands, the Bill would
introduce a new regulatory regime for food makers and suppliers by requiring businesses to tailor their food safety
procedures to the level of risk they manage. The intention is to reduce the incidence of foodborne disease and further
align our food safety requirements with those of our trading partners.
Under the Bill, high risk businesses such as restaurants or baby food manufacturers would be required to operate under a
regulated “food control plan”, whereas businesses in the medium risk category such as bakeries or pre-packaged food
manufacturers would be regulated under “national programmes”. Low risk businesses, such as those running roadside
stalls, selling their own home-grown produce at markets, or operating charity sausage sizzles, would simply receive free
information on “food handler guidance” describing how to ensure their foodstuffs are safe for consumers. Householders
growing their own produce or swapping with others would not be affected.
According to the Bill’s Regulatory Impact Statement the economic cost to New Zealand from foodborne illness in 2009 was
estimated to be $86 million per year.[2] However, a new study commissioned by the Ministry of Agriculture and Fisheries
has nearly doubled this estimate to $162 million![3] On closer examination, the new report, which provides an analysis
of the total economic cost to the country of six foodborne illnesses - Campylobacteriosis, Salmonellosis, Norovirus,
Yersiniosis, STEC and Listeriosis - during 2010, shows the breakdown of the $162 million as follows:
· Cost of treatment - $6 million
- $5 m cost of hospitalisation
- $1 m in GP costs
· Cost of food industry regulation and supervision - $16 m
· Cost of business compliance - $12 m
· Loss of work output due to illness - $27 m
· Residual private cost - $100 m
In other words, out of the so-called $162 million cost of foodborne illness - that is being used to justify a massive
re-regulation of the food industry - only $6 million is the direct cost of health care. The rest is made up of the cost
of setting and complying with food hygiene standards, workforce losses caused when people are ill, with the lion’s share
of the cost a guestimate of the value private individuals place on not getting sick! Put simply, the $162 million cost
to justify the Bill is a gross exaggeration of what most people understand to be the real ‘cost’ of illness.
In 2006, as a result of the rising rate of campylobacter food poisoning - which peaked at almost 16,000 notified cases -
various sectors of the food industry involved in high risk foods like chicken, entered into voluntary food control
arrangements aimed at reducing the incidence of infection. This new methodology is largely responsible for having halved
the incidence of campylobacter since 2006. With such voluntary arrangements showing the way, many in the food industry
are now asking whether there really is a problem that needs to be solved through a massive re-regulation of the industry
- or whether the necessary improvement could be achieved through minor tweaking of problem areas.
A question that springs to mind is how much food poisoning occurs as a result of poor food handling practices in the
home, but recent figures are hard to come by. A report that covered the period from 1998 to 2001 found that 34 percent
of food poisoning outbreaks originated in hotels, restaurants or other eating establishments, 32 percent in private
homes, 9 percent in workplaces, schools or kindergartens, 6 percent in hospitals or residential institutions, 2 percent
from retailers, 1 percent from caterers, none from food manufacturers, and 16 percent were either unknown or from other
sources.[4] A 2010 study, which looked at the commercial origins of foodborne illness outbreaks, found almost 90 percent
came from restaurants, cafes and takeaways, with less than 10 percent from caterers, supermarkets, and other food
outlets. In other words, the way we handle food in our homes remains a crucial matter when it comes to the incidence of
foodborne illness.[5]
This week’s Guest Commentator is Dr Eric Crampton, a Senior Lecturer in Economics at the University of Canterbury, who
has also been looking into aspects of the Food Bill. He worries that the cost burden associated with the new Bill will
become a disincentive to entrepreneurship: “Perhaps worse than my potential loss of choice as a consumer is the loss of
an easy pathway to small-scale entrepreneurship. Even if the monetary costs of registration as a food producer are low,
Wellington often weighs too lightly the discrete hurdle thrown in front of a potential entrepreneur who has never
otherwise had to worry about compliance regimes. The dread costs of figuring out which forms to fill out, and the fear
of getting something wrong, can be very real barriers to would-be new small-scale entrepreneurs. When you’re really not
sure if you’ll be able to make a go of a new venture, adding a hurdle of having to seek permission can provide a burden
much larger than the nominal $50 registration fee.” To read Eric’s article, click here>>>
In their submission to the Bill, Horticulture New Zealand explained that in spite of giving assurances that existing
industry food safety programmes would be recognised, the government failed to do so requiring instead some 7,000 growers
in a low risk industry - who have never needed to be registered before since they operate under an industry protocol -
to register and be subjected to almost $8,000 in compliance costs.[6]
In her submission, pensioner Biddy Fraser-Davies, who makes cheese from her three cows (Sally, Emily and Molly) and has
a turnover of under $20,000, explains how she only had to pay $100 to her local council for food safety compliance to
set up eight years ago, but compliance costs would increase to nearly $5,500. She told how her application to make a new
‘raw’ hard cheese had been sitting with the regulators for over two years and that indications were of compliance costs
in excess of $600 for each ‘batch’. She explained, “My ‘batch’, typically is a single wheel of cheese around 3 or 4
kilos! Even my most dedicated customer will baulk at this price being added to the cost of the cheese”.[7]
Lisa Er, founder of Lisa's Hummus, believes that if the food bill had been around 15 years ago, the compliance costs
would have prevented her from getting off the ground: “I had absolutely no money, nothing to invest at all. I had been
on a benefit so I was starting from the ground up. Lisa's now has 123 employees, so that's made a difference to the
country, but I couldn't even have started because I had no money whatsoever.”[8]
For a government that claims to be committed to encouraging wealth creation and reducing compliance costs on small
business, the Food Bill could be a major step backwards. It appears to be being driven more by bureaucratic
considerations rather than the need to encourage entrepreneurship in the food sector - within the bounds of stringent
food safety imperatives. It is also not clear what the answer is to a fundamental question that should be asked of all
new legislation: Is there a problem to be fixed and if so will this Bill fix it?
In light of the concerns that are now being raised about the Bill, surely the best course of action would be for the
Minister to re-open submissions to let a new Committee of Parliament re-examine the issue. If more food sector operators
were encouraged to share their views, they may identify better ways of dealing with problem areas that would not involve
the total re-regulation of the whole food industry. This could lead to safer food, less disruption and lower costs – a
win/win all around. If this were the case, the Bill could be withdrawn.
That is essentially the message that the New Zealand Food and Grocery Council gave to the government in their submission
– I will leave the last words to them: “As far as FGC can tell the current regime is adequate. There has not been
widespread concern with the safety or suitability of food that is manufactured in New Zealand. In fact, New Zealand has
a highly regarded worldwide reputation for producing high quality safe food. This is all achieved under a system that is
largely self regulatory. Food manufacturers in New Zealand understand the importance of providing safe and suitable
products and in a small market like New Zealand where there are only two major supermarket retailers, reputation and
branding image are vitally important.”[9]
The FGC acknowledges that there are concerns - such as small pockets of unacceptably high levels of campylobacter - but
they believe the New Zealand Food Safety Authority could deal with these through education and by enforcing current
regulation: “In our view, if the current system of regulation is not broken there is no need to try to fix it. This is
certainly the case if the fix will cost manufacturers and consumers more. We urge the Committee to consider whether
there is actually a need to introduce more regulation in this area and if it is not justified to either leave things as
they are or make minor changes where needed.”
NZCPR POLL
This week’s poll asks:
Do you see a need for further regulation of the food industry?
To vote click here>>>>
(Readers comments will be posted here>>> daily)
View feedback on the last poll here>>>
FOOTNOTES
Articles can be found on the NZCPR RESEARCH PAGE - click here>>>
1.Food Bill
2.Regulatory Impact Statement 2009
3.Applied Economics, Estimating the Economic Cost of Foodborne Illness in NZ
4.WHO, The present state of foodborne disease in OECD countries
5.Environmental Science and Research, Foodborne disease in New Zealand 2010
6.Submission Horticulture NZ
7.Submission Biddy Fraser-Davies
8.3 News, New law worries small-time food outlets
9.Submission Food and Grocery Council
NZCPR ADMIN
Please feel free to forward this newsletter on to your own networks and encourage other people to subscribe - that's how
we grow.
If you would like to support the publication of these NZCPR newsletters and our website - and receive your free EBOOKs
and unlimited access to our website Debating Forum, please click here>>>
ends