What is your budget for food labelling errors?

Do you budget for food labelling errors? Such errors could incur important expenses that can seriously unbalance a budget.

Food laws are enacted to protect the public. Those who transgress acts and regulations are liable to government penalties proportional to the offence. Minor labelling errors, with no impact on the health and safety of consumers, will often lead to a simple warning to correct the label at next printing. However, more serious infractions or careless repeat of minor infractions are subject to fines and even imprisonment.

Common infractions reported by food labelling inspectors include:

1. Product containing unauthorized ingredients or food additives;

2. Inaccurate or incomplete nutritional labelling;

3. Missing labelling information (e.g. country of origin, grade name, etc.);

4. Language requirements not respected;

5. Misleading representations (e.g. statements exaggerating the positive features of the product);

6. Non-compliant ingredient list (inappropriate nomenclature of ingredients; faulty order of declaration; incomplete lists)

7. Overstated net quantity;

8. Graphic requirements not respected;

9. Etc.

Infractions may be reported by federal, provincial or municipal food inspectors during routine inspection activities. They may also be reported by consumers and industry competitors. Indeed, some food manufacturers do not hesitate to report their rivals’ unfair manufacturing or labelling practices, especially when it causes them a competitive disadvantage.

The Law

The Canadian Food and Drugs Act states that:

No person shall sell an article of food that

1. has in or on it any poisonous or harmful substance;

2. is unfit for human consumption;

3. consists in whole or in part of any filthy, putrid, disgusting, rotten, decomposed or diseased animal or vegetable substance;

4. is adulterated; or

5. was manufactured, prepared, preserved, packaged or stored under unsanitary conditions.

and

No person shall label, package, treat, process, sell or advertise any food in a manner that is false, misleading or deceptive or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit or safety.

and

Every person who contravenes any provision of this Act or the regulations, as it relates to food, is guilty of an offence and liable:

1. on summary conviction, to a fine not exceeding $50,000 or to imprisonment for a term not exceeding six months or to both; or
2. on conviction by indictment, to a fine not exceeding $250,000 or to imprisonment for a term not exceeding three years or to both

Costly Consequences

Beyond government penalties, labelling errors or negligence may lead to other very costly consequences. The government penalties may in fact be only a small portion of the overall cost. The consequences of non-compliant food labelling could include:

1. The obligation to correct and re-print labels or packaging;

2. The seizure or detention of a product before it reaches the market;

3. The recall of a product already on the market;

4. Legal actions (e.g. from victims of undeclared allergens);

5. Negative media coverage: the company names and the details of the judiciary offences are published on the CFIA website. Serious offences reach social media platforms (Twitter, Facebook, etc.), and traditional media (print media, radio and television);

6. Diminished sales and poor employee morale resulting from the negative impact on the company’s reputation;

7. Potentially higher insurance costs;

8. More frequent inspections as the government officials prioritize companies presenting the highest risk;

9. Suspension, cancellation or non-renewal of the establishment’s licence or registration.

More specifically, in the case of a food product recall, the costs also include the value of the wasted food and the revenue loss, in addition to the time and resources to:

• communicate the recall measures to the authorities and alert the public;
• physically remove the product from market;
• reimburse consumers who return the product.

Since time is a critical issue when the health and safety of consumers are at risk, every food company should have written procedures, and model alert notices to enable them to act rapidly in case of an incident. Without such contingency plan, the delayed reaction to a serious incident can significantly increase the risks and costs.

Statistics

The table below shows the prevalence of food recalls in Canada in 2015. A total of 385 recall events took place. However, the number of recalled products is much higher than the recall events, since many incidents involve several products (e.g. contaminated ingredients used in several different products).

In January 2016 alone, 21 food recall warnings have already been issued by the CFIA, 19 of which are due to undeclared allergens. One company failed to declare 5 allergens in 2 of their products. Needless to say, omission of one allergen suffices to issue a recall.

Resaon for recall	January to December 2015	January 2016
Undeclared allergen	164   (49 %)	16   (64 %)
Microbial contamination	97   (29 %)	3   (12 %)
Extraneous material (e.g. bone fragments, plastic, metal, rubber, wood, glass, sand, lead, insects)	45  (13 %)	4   (16 %)
Contamination chimique (e.g. pesticides, antibiotics, non-permitted food colours)	11 (3,3 %)	1   (4 %)
Packaging integrity (ex. : swollen cans, bursting bottles, tampering)	8  (2,4 %)	0
Incorrect or incomplete nutrition data (ex. : sugar content not declared)	5  (1,5 %)	0
Other labelling issues (ex. : ingrédients non déclarés)	4  (1,2 %)	0
Other issues	3  (0,9 %)	1  (4%)
Total	385	21

Aside from recalls, the CFIA has the authority to seize, detain and/or dispose of food products that do not meet Canadian requirements. For the period of 12 months from October 2014 to September 2015, a total 959 imported and domestic food products were seized, detained or disposed of by the CFIA. The products have been found to be non-compliant for a number of reasons, among which about:

• 10% were due to inaccurate or misleading labelling;

• 6% due to issues related to food additives;

  4% due to mislabelled allergens.

Seizures/Detentions/Forfeiture	Oct. 2014  to Sept. 2015
Imported food products	856    (89 %)
Food products made in Canada	103   (11 %)
Total	959  (100 %)

Furthermore in 2015; the CFIA has suspended the registration of 14 establishments; cancelled the operating license of 3 companies, and refused to renew the licence of three other companies.

Fines

In 2015, the CFIA reported fines related to food labelling ranging from $1500 to $21,000.

A Quebec based company was condemned to pay $6000 in 2012 for selling a product with a misleading label. After committing a similar labelling offence in 2015, they were served a new fine for double the amount.

While fines are often charged to companies, they may also be charged to specific people responsible for the offence. In 2015, a third of the fines were charged to individuals rather than to their employers. For example, last May, a $12,000 fine was issued directly to the general manager of a company in British Columbia, who was deemed personally responsible for the false labelling of poultry products.

The same month, the former president of a Quebec company was ordered to pay a $21,000 fine for having directed, authorized, consented to or participated in the alteration of computer data relating to product traceability, used labels conveying false or misleading information concerning the date of production of meat products, and made false statements on export certificates.

In October 2014, a Montreal business pleaded guilty to 2 charges under the Canadian Food and Drug Act and the Canada Agricultural Products Act. It was condemned to pay $7,500. The company illegally removed, altered or interfered with food products that had been seized and detained during routine inspections carried out by the CFIA. The foods had been detained because they either contained non-permitted vitamins or were not labelled in compliance with bilingualism requirements.

Industry Responsibility

Food companies are responsible for their manufacturing practices and the labelling of their foods. They should have a contingency plan in case the worse should prevail, so as to limit as much as possible the damages of a necessary food recall.

With major modifications to the food labelling regulations expected to come into effect in the near future, many food manufacturers may be faced with confusion and uncertainty. Even large companies with regulatory affairs departments may be overwhelmed with the additional work load triggered by the new regulations.

To avoid the problems and costs associated with non-compliance, these companies may benefit in outsourcing at least part of their labelling work to consultants. It is a small investment to avoid the high costs of non-compliance. Budgeting strategically involves investing in prevention.

If you are concerned that your company may be vulnerable to labelling infractions, visit ACC Label’s website , and fill out our Request a quote form. With over 25 years of food labelling expertise and our team of nutritionists specialized in Canadian food labelling we offer the peace of mind.

Références

1. A Tool for Managing Allergen Risks in Food Products, CFIA, 2013.

2.  Food Recall Warnings, CFIA

3.  Handling Rework in the Food Industry, Government of Manitoba: Agriculture, Food and Rural Development.

4.  Non-Compliant and Disposed Food Products, CFIA

5.  Paper on the Allergen Control Activities within the Canadian Food Inspection Agency, Health Canada Food Safety Assessment Program © 2003, 28 pages.

6.  Prosecution Bulletins, CFIA

7.  Suspensions and Cancellations, CFIA