As announced in the post of October 30, 2013, the European Commission was expected to table a report concerning mandatory country of origin labelling (COOL) for meat used as an ingredient. In December 2013 this report was published. The report weighs the need for the consumers to be informed, the feasibility of introducing mandatory COOL and provides a cost/benefit analysis including the impact on the single market and international trade. On the basis of the debate following this report, the Commission will consider what, if any, appropriate next step should be taken. Tabling a legislative proposal concerning COOL for processed meats is a possible outcome. What was in the report?
Brief description of EU supply chain of processed meats and traceability
The EU meat processing industry represents more than 13.000 companies (Food Business Operators, FBOs) being mainly SME’s (90%). Products range from relatively simple meat preparations, e.g. fresh meat with spices, to sophisticated multi-ingredient foods. SME’s tend to change their suppliers more times a year to guarantee an adequate level of raw material at an affordable price. When the FBO process meat into (multi-ingredient) foods, these are then further sold to retailers/catering/butchers. Because of the variety of suppliers the FBOs of (multi-ingredient) foods use and the relatively small quantities they order, the FBOs do not have enough bargaining power to impose origin requirements to their suppliers. The supply chain of processed meats is quite complex and lengthy. The more complex the cutting and processing stages and the more advanced level of processing, the more complex traceability becomes. The existing EU traceability systems are not adequate to pass on origin information because the legislation is primarily based on the need to ensure food safety. Information to consumers is becoming more important, but food safety is still the core of EU food law. (see Article 18 of Regulation 178/2002 and Commission Implementing Regulation 931/2011 on the traceability requirements for food of animal origin). Because of the structure of the supply chain, the absence of a significant B2B interest in origin information and the inadequacy of the current traceability systems, the implementation of transmission of origin information to the consumer will be challenging.
Consumer interest in COOL
Despite challenging implementation, no less than 90% of consumers demand COOL for processed meat, but price and quality of meat are considered more important factors affecting consumer choice. Consumers would specifically like to know the country where meat was produced. The high percentage of consumers that want COOL could partly be caused by the horsemeat scandal, given the fact that the survey for the report took place in the midst of this scandal. According to the report, the consumer wants to be informed about the origin of meat, but does not want to pay for the additional costs that would be incurred in providing that information.
The report is accompanied by a Commission Staff Working Document, which underpins the report. Further, an external study commissioned by DG SANCO by the Food Chain Evaluation Consortium (FCEC) has been undertaken. Results van be found here and here. The report describes three different scenarios:
- Maintain origin labelling on a voluntary basis (status quo);
- Introduction of mandatory labelling on the basis of a) EU/non-EU indication, b) EU/specific third country indication;
- Introduction of mandatory labelling indicating the specific EU Member State or specific third country.
For scenarios 2 and 3, different modalities of processed meats have been studied for the three main categories of the products concerned in an increasing order of processing. Scenario 2 is less informative than scenario 3, as scenario 3 provides more specific origin information. Please see below for a table concerning scenarios 2 and 3.
The scenarios examined
Scenario 1 would not raise any additional operational challenges but it would not provide a fully satisfactory solution to the consumer demand for origin information. In this respect scenario 2 and 3 would both be more desirable. However, scenario 2 would result in an increase in operating costs for FBOs up to 25% and may result in market segmentation and changes in international trade flows. It would also increase the burden on public authorities with 10-30%. Under scenario 3 the increased burden on public authorities is expected to be even higher along with an increase of 8-12% of the total production costs.
Table: Advantages and disadvantages of origin modalities under scenarios 2 and 3.
|Modalities under 2nd and 3rd scenario||Advantages||Disadvantages|
|Category I: Meat preparations/mechanically separated meat||Country where ingredient was wholly obtained or country of last substantial transformation (Customs Code)||– Provides meaningful information to the consumer;- Trimmings and fat could be used as ingredients, where origin is determined as the country of the last substantial transformation.||– Additional traceability systems;- Implementation could be challenging if multiple origins are involved;- Trimmings and fat are not likely to be used as ingredients in cases, where origin is determined as the place of minimum rearing prior to slaughter, given the challenges in storage/traceability.|
|Place of minimum rearing prior to slaughter + place of slaughter||– Places more emphasis on the provenance of the raw material where the ingredient was not wholly obtained in one country.||– Additional traceability systems;- Implementation could be challenging if multiple origins are involved;- Trimmings and fat are not likely to be used as ingredients, given the challenges in storage/traceability.|
|Category II: Meat products||Country where ingredient was wholly obtained or country of last substantial transformation (Customs Code)||– Places more emphasis on the place of processing where the country of last substantial transformation applies;- Technically feasible for FBOs;- More practical, if multiple origins are involved;- Trimmings and fat could be used as ingredients.||– Provides no information on the provenance of the raw material where the country of last substantial transformation applies.|
|Place of minimum rearing prior to slaughter + place of slaughter||– Places more emphasis on the provenance of the raw material where the ingredient was not wholly obtained in one country.||– Provides no information on the place of processing;- Additional traceability systems;- Particularly challenging where multiple origins are involved;- Trimmings and fat are not likely to be used as ingredients, given the challenges in storage/traceability.|
|Category III: Multi-ingredient foods with meat used as an ingredient||Country where ingredient was wholly obtained or country of last substantial transformation (Customs Code)||– Places more emphasis on the place of processing where the country of last substantial transformation applies;- Trimmings and fat could be used as ingredients.||– Provides no information on the provenance of the raw material where the country of last substantial transformation applies;- Additional traceability systems;- Particularly challenging where multiple origins are involved.|
|Place of minimum rearing prior to slaughter + place of slaughter||– Places more emphasis on the provenance of the raw material where the ingredient was not wholly obtained in one country.||– Provides no information on the place of processing;- Additional traceability systems;- Particularly challenging where multiple origins would be involved;- Trimmings and fat are not likely to be used as ingredients, given the challenges in storage/traceability.|
Final thoughts and more upcoming changes
The overall conclusion of the report is that consumer interest in COOL is strong, but this is not reflected in the willingness pay for the extra costs for FBOs and an additional administrative burden. Further, as set out in my previous post on this subject, COOL would not prevent fraud like the horsemeat scandal from happening again at all. While being informed about the origin of the meat, the consumer still risks receiving misleading information concerning the ingredient(s) itself. However, the horsemeat scandal did show that the current traceability systems are not adequate in case of incidents. In the aftermath of the horsemeat scandal, the debate concerning COOL might therefore give rise to changes to the traceability systems. More specifically, the discussion between the Commission, the Council and the Parliament concerning COOL may result in legislative changes that have an impact on your business. Aside the report discussed in this post, the Commission is also expected to adopt implementing rules on mandatory COOL for unprocessed meat of sheep, goat, pig and poultry, based on the New Labelling Regulation. Get informed and subscribe to updates from FoodHealthLegal (see section above ‘Tweets” on the right side of your screen) in order to stay posted!
Italy vs. Croatia
What’s in a name? With Croatia’s accession to the European Union as of 1 July 2013 the beloved Croatian wine called Prošek is not allowed to be marketed under the name ‘Prošek’ anymore. How come? The Italian wines marketed under the name ‘Prosecco’ enjoy the rights granted by the protection of Designation of Origin since 17 July 2009. Meanwhile, the Croatian Prošek wine, even though it has been produced since hundreds of years ago, enjoys no such protection or protection as a “geographical indication” protection, due to the failure of the Croatian national authorities to protect this name.
EC Regulation No. 1234/2007 (Single CMO Regulation) lays down the rules on the protection of “designation of origin” (DO) and “geographical indication” (GI) of wines marketed within the EU, independent whether they originate from an EU Member State or a third country. The DO or GI protection of wines originating from third countries (as Croatia was before joining the EU) is possible without going through the entire procedure set out in the Single CMO Regulation, provided that such protection is initially granted on national level (Article 118d). Croatian Prošek was not protected on national level and therefore could not obtain protection on EU level anymore.
No focus on protection of the names of local products
In order to convince the EU for its membership in the Union, Croatia had to solve several issues. Clearly, during that period there was no focus on protection of products, such as Prošek, on EU level. In fact, besides the Prošek wine, many other Croatian products (http://www.croatiaweek.com/no-croatian-products-with-european-protection/) lack protection on EU level. This might be the result of a weak IP protection policy, which maybe characterizes not only Croatia but also other western Balkan countries that aspire EU membership such as Albania, Bosnia and Herzegovina, Kosovo, Montenegro, Serbia and The Former Yugoslav Republic of Macedonia. This case should serve as a lesson to those countries so that they ensure that their products are properly protected before their eventual entry into the EU. See also this article.
Back to the bottles
Coming back to the Processo and Prošek dispute, why is it forbidden to use the name Prošek for Croatian sweet wine since 1 July 2013? Italian Prosecco producers claimed that the name Prošek is too similar to their already protected name. The name Prošek might therefore confuse those consumers who intend to buy Prosecco but end up buying Prošek. Such claims were followed by the threats of the Italian Prosecco wine producers about complaining to the EU authorities in case the Croatian wine producers would continue to market their wines under the name Prošek.
One could argue that the first paragraph of article 118j of the Single CMO Regulation allows the registration of a name that is wholly or partially homonymous with that of a name already registered. However, this argument will not be successful as the local and traditional usage and the risk of confusion are decisive factors in determining a permissible registration. The traditional usage of the name Prošek and this wine`s qualities and differences when compared to Prosecco may be found here, here and here. Looking at the differences between the sweet Croatian Prošek and the sparkling Italian Prosecco, I couldn’t help but wonder how a consumer would confuse a bottle of Prošek with a bottle of Prosecco.
Conclusion: take up that challenge!
The Croatian authorities gave the impression that they gave up trying to protect the name Prošek, without fighting for it. The threat of being sued for marketing the Croatian wine under the name Prošek does not necessarily mean that the European court would decide in disfavor of Croatia. The Court of Justice has to decide whether or not the names Prosecco and Prošek may co-exist (as in the similar case with the Hungarian “Tokaj” and the Italian “Tocai” (See joined cases C-23/07 and C-24/07, ‘Confcooperative Friuli Venezia Giulia and Others’).
The author is grateful to Arber Gjunkshi, paralegal at Axon Lawyers, for his valuable contribution to this post.