While the harmonisation of the EU's food laws is supported by industry, legislation should be simplified to make it easier for small businesses to compete, according to a European Commission report.
The 328-page report, released by the Commission at an industry conference last week, forecasts that the competitiveness of the EU food sector will continue to decline relative to other regions unless specific actions are taken by governments and industry.
One of these areas is the simplifying of food legislation, say the three independent researchers who were commissioned to complete the analysis.
While industry does not view legislation as putting industry in a less competitive position against US rivals, better and simplified food laws could be promoted, with impact assessments and independent quality controls.
"The burden of legislation could be reduced for businesses by codification, clarification and simplification," they advise. "Guidelines for implementation of food regulations by member states could also help. Food safety inspectors should not only check the compliance but also explain legislation to business."
Their analysis of the legal framework indicates that food companies have a balanced view on EU food legislation.
"They see a number of benefits," the researchers stated. "First of all the food safety level is seen as satisfactory. That is also in the interest of business, as products perceived as less safe will be hard to sell."
The food sector also recognises the positive impacts on the competitive environment of a legal system that creates a level playing field through harmonisation for all players, including those from abroad.
"It also provides companies with a positive reputation outside the EU," the researchers stated.
However, those interviewed in the survey reported a number of remaining problems in harmonisation, which has not been fully achieved.
For example there are differences among EU countries in the types of pesticides allowed for crops. National derogations were also found to exist and interpretation of European law as well as enforcement differs between member states, participants stated.
They also note that EU food legislation is characterised by a continuous flow of updates and new regulations.
As disclosure of legislation is not structured, this creates additional problems, they stated.
"The Official Journal is chronological, consolidation and codification are an exception and the EU website is not official," they stated. "The connection between regulations and national legislation is problematic."
While the bigger food companies tend to outsource the burden of staying informed or incorporate the activity of keeping informed fairly easily in normal management practices of specialised staff, small and medium-sized enterprises (SMEs) are not able to keep up to date that easily.
The researchers suggest that one solution to help SMEs cope is to introduce what they call a "regulatory rhythm".
"The US system of continuous codification and structured disclosure could be copied as a best practice," they stated. "Compliance assistance and more self-regulation also contribute to alleviating the problems of changing legislation."
Criticism of the legislation focused on the details with "quite a few improvements" seen as possible.
"Improvements would be welcomed in stability, clarity and accessibility of both legislation and authorities," the researchers stated. "The biggest burdens for SMEs are experienced from food hygiene and labelling legislation."
Due to tough standards the majority of the respondents and interviewees refrained from innovation that requires premarket approval.
Laws such as those applying to new additives, novel food, GM foods, and health claims were pinpointed as overly restrictive.
Novel foods requirements restrict innovation on average more than hazard analysis critical control point programme (HACCP) standards, traceability and other requirements, participants stated.
"Due to the costs and time involved, it is very hard for a regular food business to bring a new additive, novel food, GMO or health claim to the market," the researchers found. "For those who are in a position to follow such a procedure, it is not always clear precisely which procedure applies, what requirements must be met, how long the procedure will take and if a favourable outcome may be expected."
Respondents said uncertainty in applicability of the approval process and its outcome, the costs and time involved restrict innovation.
Processing an application for a novel foods takes about three years on average, the researchers stated.
"These are therefore processes for the happy few," the researchers stated. "Innovation could be supported by further harmonisation."
Parallel procedures for different types of pre-market approval, and recognition of judgements of the US Food and Drug Administration and the FAO and WHO Expert Committee on Food Additives, are other solutions.
"Preliminary procedures, negative clearance and compliance assistance could also help," they suggest. "Fatal deadlines for authorities -- surpassing a deadline means automatic permission -- could speed up the approval process."
Administrative costs, technical simplification and co-regulation using existing independent standards could be used instead of new EU standards, they advise.
A public-private initiative on reducing and standardising the large number of industry control systems could also be formed as part of a programme of self-regulation.
They also conclude that processors are confronted with an overdose of controls. They must implement self controls under required hazard analysis critical control point programme (HACCP) standards, audits under private standards, official controls by member states and audits of controls by the EU's Food and Veterinary Office.
"Private standards - like BRC, EuroGap etc. - help to comply with legal requirements," the researchers stated. "They lower administrative burdens, as they are better integrated in business processes."
They suggest that the EU recognise civil audits in official controls to reduce costs. The public system could also develop a system control of private audits.
"The most straightforward strategy to reduce administrative burdens is, without doubt, reduction of the quantity of applicable legislation through deregulation," they stated.
Different strategies could be assessed to deregulate. One method is to delete existing provisions.
The Netherlands' food and product safety authority for example, published a policy document in which it announced that it would no longer enforce 20 per cent of the legislation for which it was responsible because it felt that the legislation concerned
could not contribute to food or product safety or to animal health and welfare.
"Other national and European authorities should be invited to draw up similar lists of legislation which they feel is expendable," they stated.
Another strategy is codification. Codification could significantly reduce the number of laws, eliminate needless repetitions and improve the accessibility of the system, they stated.
In the long term, some of the problems that surfaced during the research can only be remedied by improving the structure of EU legislation.
"For long-term measures, inspiration can be derived from US legislation, in particular its continuous codification and systematic publication," they stated.
In terms of costs, the effect of legislation on a company's bottom line were hard to assess, the researchers noted.
In the Netherlands, the Ministry of Public Health published a study on the costs of food legislation, estimating them at €939m per year, of which €404m was the result of the national implementation of European laws.
The key cost drivers were hygiene and labelling laws. A study by the UK Food Standards Agency (FSA) on the impact of the General Food Law concluded that 'relevant control systems are in place' in UK companies.
The FSA estimated that hygiene and HACCP rules cost industry £96.1m (€134m) per year.
A study on HACCP compliance costs in dairy and meat businesses in Italy, the UK and the Netherlands estimated costs at 0.7 to 3 per cent of turnover.
The study concluded that 'costs are justified, there are benefits'.
A study in Danish food businesses by another researcher looked at differences between businesses.
The study concluded that winners and losers depend on the quality of the management of businesses, not so much on the type of legislation.
Another major complaint from industry relates to ambiguity in the texts of food laws.
In general the researchers conclude that the EU's old food law system may have been complex, "but it seems somewhat bold to label the new system 'simple' and 'transparent'".
"This problem is highlighted by the need to publish interpretive texts soon after the entry into force of the regulations," the researchers stated. "One major cause is haste, another is trying to achieve compromises."
They point to the example of the acceptance of high pressure techniques in Europe. The technique involves using high pressures on food products as a means of decontamination.
"In the US, this technique is considered state of the art," the researchers noted. "In the EU uncertainty prevails on the question whether or not application of this technique falls within the ambit of the novel foods regulation."
In the US, microbiologic reduction is the only criterion for approval.
If the scope of the novel foods regulation had been clearer, the technique would probably be common in the EU, they stated.
In the end however, industry generally supports the EU's food legislation.
"It is not considered as a major factor hampering competitiveness, nor is the EU system seen as inferior to the US-system," the researchers found.
The food and drink industry in Europe is made up of about 280,000 companies, of which half are considered SMEs.
The industry has an annual turnover of about €800bn.
The conference on the promotion of the EU's agro-food industry was held in Brussels between 15 to 16 November.
The report is available here: http://ec.europa.eu/enterprise/food/index_en.htm.
A general article on the report was published on FoodProductionDaily.com on 19 November 2007 (Micro processing and increased productivity to boost industry ).