DEFRA: Changing labels costs "substantially" more than we thought

The report - conducted by Campden BRI and commissioned by DEFRA (Department for Environment, Food & Rural Affairs) to help legislators more accurately evaluate the costs and benefits of food labelling changes – was published as the Council of the EU reached a political agreement over proposed food labelling changes in the Food Information Regulation.

Its authors conclude that the reported costs of label changes per stock keeping unit were "substantially greater than those previously quoted by the European Commission and those quoted in UK impact assessments".​

They also highlight the “significant, consequential costs arising from the otherwise apparently straightforward requirement to change a label to indicate the origin of (one or more) ingredients”.​

COOL is complex and expensive ​

Their analysis explored a large number of factors often overlooked in impact assessments, including the costs of validating information on which country of origin labelling (COOL) would need to be based; losses of pre-printed label/die stocks; artwork origination/amendment; loss of promotional opportunities and supply chain and other logistical requirements such as multiple packaging and stockholdings and segregating ingredients.

They added: “A detailed breakdown of the components of direct and indirect costs highlights that the real cost of changing a label, and, in particular, identifying the country of origin of one or more ingredients in complex, compound foods... will, in many cases, be considerably more than the apparently straightforward cost of adding a few words or a line of text.​

“Consequently, the costs identified in this survey are significantly higher in many cases than the figure of about £1,000 per SKU (stock keeping unit) widely quoted hitherto, and more closely equate to those identified in a number of earlier international studies.”​

Although it was self-evident that the costs of any proposed change would vary according to the nature of the product and change in question, say the authors (Maria Balazs-Horvath, Neville Craddock and Andrew Morgan), “the survey identified clearly that the change process is likely to have more steps and involve more stakeholders than might be initially apparent”.​

COOL update​

The report was published after the European council in charge of employment, social policy, health and consumer affairs reached a political agreement over the Food Information Regulation.

Under the agreement, COOL was proposed as mandatory where failure to include it might mislead the consumer as to the product's true origin, and for selected fresh, chilled or frozen meat from pigs, sheep and goats, and poultry.

In addition, where the country of origin of a food is given and it is not the same as that of its primary ingredient(s):

a) The country of origin or place of provenance of the primary ingredient(s) in question shall also be given; or
b) The country of origin or place of provenance of the primary ingredient(s) shall be indicated as being different to that of the food.

This falls well short both of the European Commission's original proposal but also of new voluntary guidelines recently drawn up by DEFRA on COOL.

Separately, the European Commission will produce a report within three years on mandatory origin labelling for:

• Meat, other than that described above
• Milk
• Milk used as an ingredient in dairy products
• Meat used as an ingredient
• Unprocessed foods
• Single ingredient products
• Ingredients that represent more than 50% of a food

This report shall take into account the need of the consumer to be informed, feasibility, and an analysis of the costs and benefits of the introduction of such measures, including the legal aspects of the internal market and the impact on international trade.

The proposals will now revert to the European Parliament for a second reading (probably in spring 2011), with a final agreement expected towards the end of 2011 and publication in the Official Journal of the EU in early 2012.