New US regulations impact food supply chain

Australian food exporters to the US are about to be hit with comprehensive new regulations across the supply chain

New US regulations impact food supply chain
New US regulations impact food supply chain

By Anna Game-Lopata |March 15, 2011

Newly passed legislation in the US will require Australian food producers and their providers to verify that their processes and products reach standards set by the US Food and Drug Administration (FDA).

Melbourne-based lawyers Hunt and Hunt, whose transport industry clients range from freight forwarders to customs brokers, say the 2010 US Food Safety Modernisation Act will bring about the most significant change since the FDA first increased its powers with respect to food.

Partner Andrew Hudson says the Act is much more comprehensive than existing bio security regulations.

"The Act will apply to everything and it’s much more intrusive,"
he says.

"It will require US importers to track and trace everything that goes into America along the supply chain. It’s a much more prescriptive, extensive set of obligations."

Hudson says the new regime is a response to several recent bouts of illness associated with imported foods.

"About 48 million people, representing one in six Americans get ill, 128,000 are hospitalised and 3,000 die each year from food borne diseases," Hudson says.

"As a result, the new legislation gives the FDA a mandate to require comprehensive, prevention-based controls across the food supply chain.

"Within six to twelve months, new systems and processes will be implemented to ensure that imported foods meet US standards and are safe for our consumers.

"For example, for the first time, importers must verify that their foreign suppliers have adequate preventative controls in place to ensure safety.

"While the obligation to do this lies with the US importer or purchaser, there will be a knock-on effect for Australian manufacturers," Hudson says.

"They will have to put a supplier verification process in place to certify their premises and to ensure providers comply with FDA requirements."

Hudson says the FDA will accredit qualified third party auditors to certify that foreign food facilities are complying with US food safety standards.

"In addition, the FDA will have mandatory recall authority for all food products," he says.

Currently the FDA is awaiting funding from the US Congress to implement the new systems, including the third party verification program and a voluntary compliance scheme for food manufacturers to become pre-approved suppliers.

"Manufacturers who sign up to the voluntary compliance program will undergo less ongoing regulation," Hudson says.

Hudson says it’s too early to estimate the increase in costs suppliers might face as the exact nature of the new requirements are yet to be revealed.

However Hudson suggests
Australian suppliers to the US start making changes in advance such as implementing track and trace technology if they haven’t already done so.

"US importers might decide to be more prescriptive than necessary by asking suppliers to provide details about the ingredients of their products or how they are produced," Hudson says.

"On the other hand, it might be that suppliers won’t have to change very much because they already comply with the standards."

"Whatever the case, suppliers must appreciate there will be a change and that the requirements may well become an international standard, with other countries wanting to certify their supply chains.

Hudson says Australian suppliers are most likely to build the extra obligations into their supply chain costs.

"They’ll have to say to their Americans clients, ‘We can do all this stuff, but we will have to recover the costs from you.’"

Other provisions of the Act:

• High risk foods – FDA now has the authority to require that high-risk imported foods be accompanied by a credible third-party certification as a condition of admission to this country.

• Additional resources
will be
directed towards foreign inspections – FDA now has the authority to refuse entry into the US of a food that has refused US inspection.

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