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Legal pain points you should take note of in 2017

We caught up with our favourite globe-trotting, flowing-locked lawyer-cum-engineer, Janusz Luterek from Hahn and Hahn, to find out his perspectives on the legal challenges you are likely to face this year in the food industry.

 

Linda: Janusz, Hahn and Hahn were our first website supporters! Thank you for your vote of confidence. I see you chat frequently on social media about consuming food after the sell by date? What is your take on this?

Janusz: This is definitely a trend to watch. There will be a lot of discussion about expired food and potentially some ill-advised activities from NCC and other consumer organisations, due to not having a full understanding of the risk. Government is definitely looking at it.

Linda: I do think there is an argument linking expiry dates and food waste. The amount of food waste is not acceptable and surely something should be done to ensure that food that is still perfectly wholesome, is not being destroyed for the sake of profits? But there cannot be a one-size fits all approach as the risks are different, depending on the food product, and I am not sure the consumers are always given the best advice.

Janusz: There is that argument, but there is a danger that the consumer could use the reverse and complain about illness after eating a dry product that expired the day before. And it is already happening. Various entities are looking at this – the Competitions Commission, the Consumer Commission, even potentially the DOH are looking at it – all different government departments that don’t talk to each other, which means they are likely to come up with different approaches to deal with the issue. So watch out for this one.

Linda: So, what is your take on expiry dates?

Janusz: With regards to best before dates – I have little concern with products being sold after this date provided the consumer is aware and given a reasonable explanation about this. There is a food chain in the Western Cape that only sells expired product but they have put up a sign quoting the wording of Regulation 146. The consumer is thus made aware that there may be some loss of quality. So, while it may be perfectly safe to consume dry products such as rice and flour after the best before date, products such as meat, fish, chicken should not be sold after the best before date due to the inherent microbiological risk. The concern I have is that many companies donate this kind of product to charities after its best before date and this would not be advisable.

 

 

Linda:    What would you advise suppliers to do regarding food fraud issues? You tweet about these issues regularly.

Janusz: This is a very real threat that should be taken seriously. Firstly, if you are committing food fraud in any form, you should stop this practice immediately. Secondly you should take measures to ensure you are not a victim of food fraud. My advice would be to stop being so trusting of your suppliers. You need to check, double check, verify and audit! I have had cases over the years where clients have been hoodwinked by their suppliers’ supplier.

The reality is that most retailers simply do not had the capacity to test all 100000 SKU’s on their shelves so it will be on an audit basis and with some statistical process of determining which products to test and how frequently. Unfortunately, the National Department of Health is not doing any testing so there is not reference point.  This means you will have to do this yourself.

Linda: I came across a supplier recently with a specification that indicated if the customer wanted micro testing, this would be for their cost and a quote would be supplied on request. Although the regulations are not comprehensive, surely the decision to test cannot be based just on cost? Aren’t companies always responsible for the legal requirements? Surely they need to have some idea of what is growing in their product?

Janusz: Contractually you can agree upon anything with regards to who pays for the testing, but you definitely cannot leave it out just because it is too expensive.

Linda:    So, what should we be testing for in relation to food fraud? We have had melamine, ground nut shells in spices. It is a challenge to know what to test for as you can’t possibly predict what type of adulteration could take place.

Janusz: This is an international concern and we do need a place where these issues can be collated as they occur, so we have a database in this regard, but currently that’s not happening.

 

 

Linda: Back to our national challenges… What specific changes in legislation are in the pipeline that the food industry should prepare for?

Janusz: Companies should take note that the Department of Agriculture, Forestry and Fisheries (DAFF) has completely changed its approach. There is no longer a minor non-compliance, now when you are noncompliant they throw the book at you. And I expect this to get worse in 2017.

Linda: It has been very interesting listening to the reactions to the department’s media release for inspection of local food safety requirements. Industry is concerned about the arrival of yet another audit. We complain when they don’t inspect, so should we be complaining when they do?

Janusz: There is a problem though, as we need to avoid duplication and triple inspections – there is a real risk that the same bag of flour can be inspected once when it’s wheat, once when it’s turned into flour, once when it’s delivered and once when it’s a bread. This will result in an accumulation of costs.

There is a danger of a noncompliance mill and even though many issues may be legitimate, they may be inconsequential. You will not be able to ignore them however. Companies are going to need to have the skills to deal with all these issues in house, otherwise it is going to cost them a fortune to outsource these.

 

 

Linda: What about the long-awaited changes to the Labelling Regulation R429, which is in draft?

Janusz: R429 is definitely going ahead. At the last FLAG meeting, we were informed that they have removed advertising to children and a few other contentious issues so that they can go ahead with promulgation. This is similar to what happened with R146.  I do think it will happen now, in fact they are talking about making each of those contentious issues a regulation on its own, rather than lumping them together.

There is also the Sugar Tax issue – there is a regulation of sort coming up and it will affect the beverage industry in a big way. I think it will play out with the consumer moving towards buying cheaper house brands. I don’t think they are going to drink less of it. The total consumption is unlikely to go down or affect the consumption of sugar in South Africa. The motivation for the legislation is revenue generation and not health which is used as a justification.

Linda:  Based on some discussions I have had recently with newbies to industry, I am horrified at the practices that are happening out there. I think the food industry take legal requirements too lightly due to the lack of enforcement? Is this a false sense of security? We have companies doing illegal things because of the lack of consequences.

Janusz: There are some members of industry that self-regulate for corporate governance and so they must do it right. But there are certainly those that stretch it as far as it will possibly go. The DAFF changes previously mentioned are thus significant as this will curb the abuse of products under the APS Act. The difficulty we still have is that no one is enforcing DOH regulation (with the exception of some compositional regulations) so most of the regulations are not monitored.

 

Linda:    Has the CPA made any impact on the food industry since its promulgation? Any notable incidents we should know about?

Janusz: All my clients take consumer complaints much more seriously than before promulgation as they are concerned that the complaint will escalate. There haven’t been any cases where the consumer has gone to the commission relating to my clients though. My advice to business is still: deal with the complaints expeditiously and then the risk is reduced.

The problem is that people don’t have any evidence. Consumers do try their luck, but a bill for antibiotics doesn’t prove anything. This is the case in 99% of all claims that I deal with – absolutely no evidence one way or the other. If it sounds like a plausible claim such as the customer broke their tooth on a stone in the salad, then the company should pay the bill – don’t haggle. (Don’t admit you are wrong but pay the bill). It is unlikely that the consumer can prove it was your stone.

Linda: Surely the same issues arise in the States?

Janusz: The difference is that in the US, there is a robust reporting system – every time someone has food poisoning you must report it. You can trace outbreaks. Here, you could have 20 people having food poisoning from different outlets, all thinking it is an isolated incident, when the problem is all related to one batch of contaminated product. It’s not centrally logged, so no one is looking at it.

Linda:    It is concerning, even more so when it does hit the newspapers and it’s children who are involved in some government feeding scheme. It’s just wrong!

 

What are your top 5 tips for a legal stock take?

 Janusz: Here are my thoughts:

  1. Firstly, you need to audit your suppliers from origin to your point of use. You must verify the whole supply chain.

  2. The next thing you need to do is to provide better consumer information on products – ready to eat versus ready to cook as an example. This applies especially to quick service restaurants who should warn consumers too.

  3. Thirdly, have systems in place for dealing with the new assignees. Now that you are going to have a lot of these guys roaming around, you will need someone to deal with invoices and reports. Make sure you understand the role of the assignee and the legal requirements they are supposed to be enforcing.

  4. My fourth point would be: If you are an importer, check the product meets the requirements BEFORE they leave the port of origin. I had two cases last year where clients have imported products and sent the importers a marked-up label with all the requirements. Those guys simply sent what they had - knowing it would be not be sent back. There have been numerous containers of products with labels that were simply noncompliant. You must inspect before the product leaves the port of origin.

Linda: So perhaps your last point would be, don’t call me if you do what Ford has done?

Janusz: Exactly

    5. If you know something is going wrong, don’t wait until it hits the headline because then it’s too late.

Linda:   What about the contractual requirements? Do you foresee any changes?

Janusz: Everyone already says we guarantee the product meets all legal requirements so I don’t think that will change. The problem is understanding and enforcing what is agreed. Usually we only look at this when there is a problem.

Linda:    Thank you again for your time and valuable input Janusz. We will chat soon.

 

 

Download Legal-Stock-Take-2017.pdf

About the Author

Janusz F. Luterek, Pr.Eng for Hahn & Hahn Attorneys

For advice on compliance and other legal issues in the food industry contact Janusz Luterek at janusz@hahnlaw.co.za - your food lawyer.

www.hahnlaw.co.za

 


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