The Act establishes a new regime to regulate organic claims and the businesses that make them. The purpose of the Act is to increase consumer confidence in purchasing organic products, create greater certainty for businesses which claim to have organic products, and facilitate international trade in organic products. The detail of the new regime will sit in standards, regulations and notices which are yet to be finalised. Practically speaking, businesses will not need to comply with the new organics system until there is a standard in place for their product(s).
Background
The Organic Products Bill was first introduced to Parliament in 2020, in light of a growing organic sector, increasing consumer demand for genuine and certified organic products, and greater regulation of organic claims in overseas markets.
The member in charge of the Bill, the Hon Damien O’Conner, stated it would “introduce robust and practical regulation to give businesses the certainty they need to continue to invest in our growing organics sector. In tandem, these regulations will give discerning consumers confidence in their choices and boost the credibility of New Zealand’s organic products on the world stage.”1
Internationally, a growing number of countries require compliance with their domestic organic product regimes or certification from equivalent regimes. The Act is intended to ensure New Zealand’s continued access to existing organic markets overseas, and to open doors to new markets.
The Act
Some key aspects of the Act include:
- Introduction of organic standards: The Act establishes a framework under which the relevant Ministry will set regulations establishing organic standards for products or classes of products. Products covered by a standard will need to comply with the standard to be described (i.e. labelled or advertised, expressly or impliedly) as “organic”. Regulations for organic standards may relate to (amongst other things):
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- The production, processing, preparation, packaging, storage and handling of organic ingredients, organic components, or organic products.
- Requirements for sampling and testing of a product.
- Obligations to keep records and provide information.
- Other matters relevant to the management of whether the product can be described as an organic product.
In the case of food, beverage, plant and animal products, regulations will be set by the Ministry for Primary Industries (MPI). MPI is currently developing a national organic standard and associated regulations for these products. MPI ran a public consultation on the draft organic regulations in 2021, and took further public submissions last year. The feedback from these consultations will inform MPI’s advice to the government on the regulations.
- Requirement to be approved as an “operator”: Any person who labels or advertises a product covered by an organic standard as organic needs to be approved as an “operator” by the relevant Ministry, subject to specified exceptions. This requirement will capture businesses who produce, process, sell, or deal in products they describe as organic. To grant approval, the Chief Executive of the relevant Ministry must be satisfied the applicant is a “fit and proper person and competent to be an operator”, and is complying with obligations under the relevant organic standard and any other prescribed requirements.The steps to getting approved as an organic operator will be set out in regulations, and will likely include the need to have an organic management plan, receive a pre-approval check from a recognised entity, submit an application, and receive ongoing compliance verification from a recognised entity.
There are a small number of businesses within the organic supply chain who will not be captured by the approval system. This includes final consumer services (e.g. restaurants) and retailers which only sell pre-packaged organic products. MPI has indicated regulations will be passed exempting very small organic businesses (those making under NZ$10,000 per year from selling their organic product(s)) from the requirement to be an approved operator, although they will still be required to meet the national organic standard for food, beverages, plant and animal products.
- Establishment of “recognised entities” for organic compliance functions: The Act enables recognised entities (third party agencies or people approved by the relevant Ministry) to have oversight of operators’ activities, for example, checking organic businesses before approval and on an ongoing basis for compliance with the Act and associated regulations.
- Imports and Exports: The Act creates mechanisms for the Chief Executive of the relevant Ministry to:
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- Approve foreign organic product regimes for products or classes of products imported into New Zealand.
- Specify, by notice, export requirements or restrictions on organic products. Under the Act, businesses are not permitted to export organic products unless they are approved as an operator that may export, and the product meets the relevant organic standard in force and any other prescribed export requirements. MPI has indicated this requirement will also apply to small organic businesses (i.e. they will not be able to export their products unless they are approved as an operator).
- Issue an official assurance to a foreign government for the purpose of meeting that government’s overseas market access requirements.
- Provide a statement of compliance about organic products produced or processed and handled in New Zealand.
- Enforcement and offences: The Act provides for the appointment of organic products officers, who have the power to enter premises to determine compliance with the Act and regulations, and to issue “improvement notices” to non-complying operators. The Act also introduces a range of new offences, including infringement offences (to be prescribed in regulations), offences involving deception, and strict liability offences. For example, it is an offence where a person:
- Sells or markets a product described as organic, if that product does not meet the relevant organic standard in force. This offence carries a fine of up to NZ$50,000 for individuals, and up to NZ$250,000 for body corporates.
- Sells a product described as organic, if the person is not an approved operator and is not otherwise exempt from the operator approval requirement. This offence carries a fine of up to NZ$20,000 for individuals, and up to NZ$100,000 for body corporates.
- Exports a product described as organic without approval, or where the product does not meet the relevant requirements. This offence carries a fine of up to NZ$20,000 for individuals, and up to NZ$100,000 for body corporates.
- With intent to deceive, and for the purpose of obtaining a material benefit or avoiding a material detriment, sells or markets a product covered by an organic standard if the product does not meet the standard. This offence carries a fine of up to NZ$200,000 for individuals, and up to NZ$600,000 for body corporates. In addition to the penalty, a court may order payment for the material benefit gained or material detriment avoided.
Where to Next?
While the Act comes into force today, practically speaking, businesses will not need to comply with the new organics system until there is a standard in place for their product(s).
The detail of the new regulatory regime will sit in these standards, regulations and notices, which will provide further information on the processes and requirements for businesses.
Businesses in the organic products sector, from production through to sale, should keep up to date with any regulations and notices brought in under the Act. It is important that businesses understand their obligations when producing and marketing organic products. Failure to do so could carry significant penalties, with fines of up to NZ$600,000 for body corporates.
If you have any questions on the Organic Products and Production Act 2023 or about marketing organic products generally, please get in touch with the contacts listed or your usual Bell Gully adviser.
1 https://www.beehive.govt.nz/release/next-steps-new-zealand%E2%80%99s-organic-regulations.