Coalition Senators' dissenting report

Introduction

1.1The Coalition introduced the National Organic Standard Bill 2024 (‘Bill’) into the Parliament, because it would give clarity, certainty and support to the producers, businesses and exporters involved in the organic industry, and confidence to the Australian consumers that they are getting what they are paying for.

1.2There is a clear and unified recognition across the organics industry, that Australia’s regulatory framework is not fit-for-purpose.

1.3The report recommends not supporting the Bill in its current form with additional consideration to be given to matters raised by submitters, while also recommending that a scoping study to be undertaken on the ‘need’ for domestic regulation in the organic industry led by the Department of Agriculture, Fisheries and Forestry (the department). The report notes that the committee:

… believes properly designed regulation could be beneficial for import and export markets along with the domestic market and could provide additional consumer confidence in Australian produce.

1.4In addition, the recent Standing Committee on Agriculture’s Inquiry into Australian Agriculture in Southeast Asian Markets, included a recommendation, in its report tabled in November 2024, that relates to regulating organic products within Australia’s domestic market to support the trade in organic agriculture in South-East Asia.[1]

1.5The Coalition remains committed to a domestic organic regulatory framework in Australia.

1.6It is important for the Australian industry and consumers to move forward, not backwards, in achieving domestic regulation.

Matters raised by submitters on the Bill

1.7Coalition senators make the following points in line with the recommendation to consider matters raised by submitters.

The definition of organics

1.8The definition of ‘organic goods’ in the Bill is the same as the definition in the Export Control (Organic Goods) Rules 2021. Having the same ‘organic goods’ regulated domestically as for exports enabled one regulatory system to operate in Australia. This was to reduce cost, complexity, and confusion.

1.9The ‘National Standard’ in the Bill is the ‘National Standard for Organic and Bio-dynamic Produce’ as updated from time to time. This is the same as the ‘National Standard’ used for exports and recognised in the Export Control (Organic Goods) Rules 2021.

1.10The ‘National Standard for Organic and Bio-dynamic Produce’ includes requirements for the production, transport and storage, preparation, packaging and labelling of organic produce. It is an information standard.

1.11The Bill provides a regulatory framework around this information standard, making the definition of organics legal, and providing compliance and enforcement functions.

Which National Standard for organics?

1.12Some submissions highlighted that AS6000-2015 should be the National Standard.

1.13The Organic Development Group (ODG) representing over 90 per cent of the industry and all certifiers indicates that ‘rather than integrating the National Standard into Standards Australia’s AS6000, the Bill maintains the existing National Standard for domestic regulation. This approach reduces costs for operators and avoids unnecessary administrative burden.’[2]

1.14The current National Standard for exports is held by the department and ‘amendments and scheduled revisions to the national standard for export are overseen by the National Standard Advisory Committee (NSAC). Anyone can make an application to amend the national standard for export, prompting a review by NSAC and, if approved, industry consultation.’ [3]

1.15The NSAC is the principal technical committee for the department and consists of individuals, acting independently of any organisation. The committee covers a range of experience including auditing, dairy, livestock, horticulture, supply, education, marketing, processing, and organic food formulations.[4]

1.16The ODG indicates:

There are currently only 120 operators out of the approximately 3000 certified organic operators in Australia using the AS6000, meaning the vast majority of operators in Australia would have to change, adding further costs. The National Standard is already recognised internationally through current equivalency arrangements.[5]

1.17Potentially both the National Standard and the NSAC composition and terms of reference would need to be reviewed to ensure it was fit for purpose if there was domestic regulation. It is understood the current National Standard is currently under review. A three-year transition period allows time for any necessary changes to be undertaken.

Exempting cosmetics from domestic regulation

1.18The ODG submission notes that:

Prior to the revision of the Export Control Act in 2020, organic cosmetics being exported from Australia had to meet the National Standard. However, following Department consultations, it was determined that importing countries do not require organic certification for cosmetics.

The cosmetic section of the National Standard is also too narrow and restrictive for most cosmetic compounds other than simple products such as essential oils.

As a result of this review and consultation, cosmetic products were deemed not to be 'prescribed goods' for the purposes of the Act and therefore not subject to the export requirements of the Export Control (Organic Goods) Rules 2021.

Cosmetics production and labelling requirements differ significantly from agricultural products and should be managed by the relevant regulatory body. This appears to be the conclusion of the regulators in the existing regulated markets. Therefore, regulating these goods under the Bill would not be practical or necessary.[6]

The Participatory Guarantee Scheme (PGS)

1.19The Participatory Guarantee Scheme (PGS) that guarantees produce as organically grown was raised, asking that the legislation be constructed so as not to penalise producers for describing their produce as ‘organically grown’.[7]

1.20The ODG’s submission indicates:

The concerns around PGS relate to the quality of auditing and compliance under the PGS system where there is no regulatory oversight from DAFF and an independent, third-party accreditation body.

Unlike DAFF-approved certifying bodies, PGS producers are not subject to independent accreditation or impartial auditing. In Europe, PGS producers cannot label their products as ‘organic’ but can market them as being produced using organic principles.

DAFF-approved certifiers are required to:

Be impartial;

Have no conflicts of interest;

Undergo annual training and regular audits witnessed by DAFF and ISO 17065 accreditors.[8]

Providing legislative capacity for the department (or another relevant agency) to act as the regulator

1.21The process for an applicant to obtain an organic certificate is based on the current process for an applicant to obtain an organic certificate for export purposes. The department currently approves a certifying body under the rules made for the purposes of the Export Control Act 2020, for organic goods.

1.22For example, the definition of ‘issuing body’ in proposed section 7 of the Bill is:

(a)a person who is an approved certifying body, under rules made for the purposes of the Export Control Act 2020, for organic goods; or

(b)if there are no approved certifying bodies covered by paragraph (a)—the Secretary; or

(c)a person who, by or under a law of: (i) a foreign country; or (ii) a part of a foreign country; performs a role similar to that of a person covered by paragraph (a) or (b).[9]

1.23The certifying body currently undertakes audits of the applicant to ensure they meet the National Standard, and any additional requirements required for exports overseas. Under the Bill the certifying body would also be able to provide an organic certificate to sell organic produce domestically.

1.24This means only one audit would be required for both export and domestic purposes.

1.25As part of its regulatory responsibilities, the department would need to continue to manage the National Standard, as they currently do now for exports. The department would need to develop:

(d)an ‘organic certificate’

(e)an ‘application form,’ the documents that must accompany the application, and the process for which an application can be made.

1.26Under the Bill the department was given powers to be able to require an audit be conducted of:

persons who hold organic certificates issued in Australia; or

persons who bring or import prescribed organic goods in Australia.

1.27This auditing provision was provided to the department as they currently undertake audits of certifying bodies for export purposes and inspect imported consignments at the border for biosecurity reasons.

1.28Examples of where the auditing power may be used includes:

if there is a dispute between a certifier and an applicant who wants to hold an organic certificate, the department can undertake an audit to understand the situation.

If the department is inspecting a consignment at the border for biosecurity reasons and can see that the goods do not have the relevant documentation for organics, can undertake an audit of the importing business.

These are not compulsory requirements. The department can charge a fee and recover the cost of audits.

1.29It was raised that the Secretary of the department should also be able to issue and revoke organic certificates under the Bill.

1.30It was noted by the department that there is a higher level of additional regulatory oversight of an approved certifying body under export requirements, than is proposed in this Bill. The Bill does contain a regulation-making power (section 64) which could be used to impose additional regulatory oversight on ‘issuing bodies’, or if required an amendment can be made to the Bill.

Compliance regulatory framework in the Bill

1.31The National Organic Standard Bill 2024 uses existing processes and a tiered approach to compliance to minimise the cost.

The certifying bodies issue, revoke or refuse to give an organic goods certificate.

If there is a disagreement, there can be a review by the Administrative Review Tribunal.

1.32The department can undertake an audit relating to organic certificates and charge a fee.

1.33The Australian Competition and Consumer Commission (ACCC) has the compliance and enforcement powers. The ACCC will be appropriately resourced. The ACCC can approve authorised officers that are also state and territory government officers or employees to be authorised officers.The ACCC will also provide education services during the transition period.

1.34Education and communication with organic operators during the transition period will be particularly important.

1.35The ODG recognise the importance of a communication strategy, particularly during the three-year transition period and proposed a framework in their submission.[10]

Constitutional impacts and interaction with state and territory legislation

1.36Section 51(xviii) of the Constitution provides the Commonwealth with the power to legislate with respect to trade marks and other categories of intellectual property.

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:… copyrights, patents of inventions and designs, and trade marks.

1.37The implementation of the Bill should be discussed with the state and territory governments in relevant forums.

$25 000 exemption for certification

1.38Requiring all businesses that sell regulated organic products to meet the National Standard avoids greenwashing, which is occurring in the industry now, evidenced in the submissions to the inquiry.

1.39Organic produce receives a premium price and consumers, if paying this premium, want assurance that it is ‘organic.’

1.40The ODG state the $25 000 threshold aims to acknowledge that smaller producers may lack the resources to pursue organic certification.[11]

No Cost - Benefit Analysis

1.41The Bill minimises compliance costs through a streamlined and tiered approach, as explained above.

1.42Two previous Cost Benefit Analyses (CBA) undertaken by Deloitte, in March 2021[12] and PWC Australia, in March 2022,[13]were referenced in the department’s submission.

1.43PWC’s suggested cost for the department to develop and administer domestic regulation seems high. The cost included:

Staff costs: It assumed that a dedicated team of professionals (with additional input from external teams such as legal) will be responsible for the implementation of a mandatory standard. Discussions with the department …confirmed that the team is expected to consist of over 40 staff members, across APS, EL and SES positions.’

Non-staff costs: substantial (several millions of dollars per year) have been accounted for to acknowledge the cost of setting up relevant IT systems and the cost of external advice and consultation required for legislation drafting.’[14]

1.44The PWC Australia CBA also excluded the imputed value that regulation could bring in terms of increased exports, while at the same time noting that it would only take minimal export benefits (approximately a 1 per cent increase in current exports and minimal new entrants) to make all the regulatory options have a positive cost benefit ratio in the ten- year analysis.[15] This included a 5-year transition period.

1.45Coalition senators further noted:

There is a positive benefit after 20 years even without exports included[16]

The non-regulatory option returns a worse result than the regulatory options after 20 years[17]

The assumption that 46 per cent of respondents indicated that the current hindrances to export could be addressed by equivalence and that those regulatory costs would be reduced by 20 per cent (based on a survey)[18]

The assumption that 13 per cent of current producers are significantly considering exporting in the near future (based on a survey).[19]

1.46The ODG made comments in relation to the CBA in their submission, highlighting:

It overlooked the significant financial burden imposed on certified organic operators by the non-regulated system. Without mandatory regulation, operators face:

additional auditing costs to validate their organic claims, often ranging between $3000 to $9000 annually, depending on the export market

duplicative certification processes, disproportionately impacting SMEs, which struggle with cumulative expenses related to audits, documentation and quality control.[20]

That market conditions have evolved since the CBA was undertaken in 2022. In New Zealand, for example, the introduction of a mandatory standard in 2023 has demonstrated clear benefits, including:

Improved market access

Reduced duplicative certification costs.

Enhanced consumer trust in organic claims[21]

The need for organic regulation

1.47There is no legislated definition of ‘organic’ for non-export use, no mandatory standard for domestic use and no requirement for certification of organic products produced and sold domestically in Australia.

1.48This leads to:

a lack of clear information which may impact consumer confidence in organic products

costs to some businesses navigating current regulations

potentially hindering market growth through barriers to trade and market access.[22]

1.49The recent Standing Committee on Agriculture’s Inquiry into Australian agriculture in Southeast Asian Markets tabled its ‘Trading North’ report in November 2024, which recommends:

… that the Australian Government support the trade in organic agriculture in Southeast Asia by…Reviewing the domestic regulatory framework to ensure its alignment with current international standards and potential rival jurisdictions, including mechanisms within the framework to define and regulate organic products within Australia’s domestic market.[23]

1.50Submissions to this inquiry into the National Organic Standard Bill 2024 overwhelmingly support domestic regulation.This is the second public consultation process, with the first being a consultation Regulatory Impact Statement.

1.51The ODG submission, which represents over 90 per cent of the industry, along with other submissions outlined the need for, and benefits from, a domestic regulation framework.[24]

1.52Specific examples were also provided including:

Kialla Pure Foods:

… the lack of export equivalence is a major impediment to growing export markets. When each individual business in our whole supply chain must meet export country requirements many farmers are increasingly deciding not to continue with these certifications due to extra costs and administration. For example, many farmers are no longer maintaining their Korean certification and this in turn jeopardises our ability to supply products into our largest export market Korea, which makes up about 40 per cent of our export income.[25]

ODG:

The Organic Milk Co. experienced significant challenges navigating the South Korean market, where organic certification systems are among the most complex and costly globally. The absence of robust regulatory oversight in Australia, which prevents the establishment of equivalency agreements, compounded these challenges. Without such agreements, the company was required to undergo additional certifications to meet South Korean organic standards, incurring additional costs exceeding AUD $200 000 over two years.[26]

Kehoe’s Kitchen:

We can afford to get our own USA Organic or Korea Organic certification, but that is not the difficult part. The impossible part is the current lack of domestic regulation requires all farmers supplying us to do the same. Looking at kimchi as an example, it has 7 ingredients. If we want to export to USA, we need to be able to source from many many more organic farmers (due to market size), from multiple states/seasons to ensure continuity of supply 12 months per year. We cannot ask 50+ farmers to outlay this cost, so that we may try to enter a market, with no guarantee to purchase from them. It would be a massive waste of their money and resources, and considering the 6 month cabbage growing period, it’s impossible. What we need is domestic regulation, so that these countries instead respect the Australian Organic standard that these farmers are already paying for and working to.[27]

Mr Tim Scott (Kandanga Farm):

The on-farm compliance and additional traceability costs us around $1.50–$2 per kg of edible meat we sell. We are a small operator and if we could sell more product because the shops we supply would know the competitors we have to share selves with – many who are labelling as organic (but not certified) were removed or made to comply, we could expand and share those costs across more kilograms of retail product. Double our size would still have the same compliance costs but reduces consumer costs by $1/kg.[28]

1.53A survey conducted by KG2 (Organic Industry Data Collection Report, 2022) indicated that 45 per cent of those uncertified agreed compulsory certification scheme/regulation would be useful.[29]

Conclusion

1.54Coalition senators are concerned that the committee’s report fails to adequately acknowledge the current industry support and need for a domestic regulation.The benefit of a properly designed domestic regulation for import and export markets and to improve consumer confidence in Australian organic produce has been clearly articulated by many submitters to this inquiry.

1.55The industry does not need another Departmental scoping exercise, particularly given that as the committee notes, the need for a domestic regulatory regime was first identified in the early 1990s.

1.56Coalition senators believe that the concept of multiple standards is confusing to consumers and creates unwanted and unnecessary expense for industry.Further, that having multiple standards has been a factor in delaying progress to a single national standard.With both the “National Standard” and AS6000 being considered for review, all efforts should be made to bring the two together.The industry coming together at such scale should be welcomed and supported by government.

Recommendation 3

1.57The Government commit to work closely with the organics industry in Australia to develop a domestic regulation framework that will include a legislated definition of ‘organic’ and a mandatory standard for organic products produced and sold domestically in Australia

Footnotes

[1]House of Representatives Standing Committee on Agriculture, Trading North – Inquiry into the role of Australian agriculture in Southeast Asian Markets, November 2024 Trading North, (accessed10February 2025).

[2]Organic Development Group, Submission 20, p. 5.

[3]Department of Agriculture, Fisheries and Forestry, Submission 21, p. 4.

[4]The National Standard Advisory Committee (NSAC) - DAFF

[5]Organic Development Group, Submission 20, p. 5.

[6]Organic Development Group, Submission 20.1, p. 7.

[7]Peter Barrs and Judith Kerr, Submission 18, p. 1.

[8]Organic Development Group, Submission 20.1, p. 7.

[9]National Organic Standard Bill 2024.

[10]Organic Development Group, Submission 20, p. 21.

[11]Organic Development Group, Submission 20.1, p. 6.

[12]Deloitte Access Economics, Cost benefit analysis for the implementation of a mandatory domestic organic standard, March 2021 (OPD 144, 8 February 2023 moved by Senator McKenzie).

[13]PWC Australia, Cost Benefit Analysis of new regulatory approach for domestic organics, report provided to inform advice to government based on policy considerations as at 21 March 2022 (OPD 144, 8February2023 moved by Senator McKenzie).

[14]PWC Australia, Cost Benefit Analysis of new regulatory approach for domestic organics, report provided to inform advice to government based on policy considerations as at 21 March 2022 (OPD 144, 8February2023 moved by Senator McKenzie), p. 42.

[15]Ibid, p. 4.

[16]Ibid, p. 4.

[17]Ibid, p. 4.

[18]Ibid, p. 31

[19]Ibid, p. 31

[20]Organic Development Group, Submission 20, p. 14.

[21]Ibid, p. 15.

[22]National Organic Standard Bill 2024, Explanatory Memorandum, p. 2.

[23]House of Representatives Standing Committee on Agriculture, Trading North – Inquiry into the role of Australian agriculture in Southeast Asian Markets, November 2024, p. 21.

[24]Organic Development Group, Submission 20, Submission 20.1 and Submission 20.2.

[25]Quentin Kennedy, Kialla Pure Foods Pty Ltd, Submission 19, p. 3.

[26]Organic Development Group, Submission 20, p. 10.

[27]Kehoe’s Kitchen, Submission 11, pp. 1–2.

[28]Mr Tim Scott (Kandanga Farm), Submission 2, p. 2.

[29]KG2, Organic Industry Data Collection Report 2022, for Department of Agriculture, Water and the Environment (OPD 144, 8 February 2023 moved by Senator McKenzie).