Agricultural law in Australia: overview

A Q&A guide to agricultural law in Australia.

The Q&A gives a high level overview of agricultural law, including acquiring agricultural companies and co-operatives, competition law, land ownership and usage rights, pricing and tender processes, tax and financing, crop seed business, importing crop seeds, commercial crop production and distribution, plant variety right protection, GM crops, GM foods, importing animals, gene patents, and product liability.

To compare answers across multiple jurisdictions, visit the Agriculture Country Q&A tool.

This Q&A is part of the Agricultural Law Global Guide. For a full list of jurisdictional Q&As visit www.practicallaw.com/agriculture-guide.

Andrew Hay, Peter McMahon, Nick Thomas, Cameron Gascoyne, Gary Berson, Richard Hoad, Dr Michael Maxwell, Scott Girdler, Cain Sibley and Yehudah New, Clayton Utz
Contents

Agricultural policy

1. State whether and when your jurisdiction has joined the following:
  • The World Trade Organization.

  • The Food and Agriculture Organization of the United Nations.

  • The International Plant Protection Convention.

  • The Office International des Epizooties, also known as the World Animal Health Organization.

World Trade Organization (WTO)

Australia joined the WTO on 1 January 1995.

Food and Agriculture Organization of the United Nations (FAO)

Australia joined the FAO on 16 October 1945.

International Plant Protection Convention (IPPC)

Australia joined the IPPC on 27 August 1952.

Office International des Epizooties (IOE)/World Animal Health Organization

Australia joined the World Animal Health Organization on 12 January 1925.

 
2. Describe the most recent national agricultural policy of your jurisdiction, in particular with respect to biotech crops and new crop growing technologies.

Government policy

With respect to domestic policy, there are three levels of government in Australia: federal, state and local. The Australian constitution grants specific powers to the Australian federal government. The Australian federal government has the power to legislate for matters such as foreign affairs, defence, taxation, trade and quarantine. The states have a broad range of powers to make laws concerning matters such as health, education, natural resources, roads, and law and order. Local governments are granted their power by state law, and are responsible for local issues including land use, planning, waste, and the licensing of food outlets.

The states are not strictly accountable to the Australian federal government, although they receive significant funding from the Australian federal government and therefore are subject to its influence. While both levels of government have legislative powers, where there is an inconsistency between a federal and state law, the federal law will prevail.

As the states have primary responsibility for agriculture and real property generally, the agricultural policies of each of the states must be considered, as well as the agricultural policies of the Australian federal government.

Federal policy. The Australian federal government's agriculture policy focuses on:

  • Export and import.

  • Quarantine and biosecurity.

  • Research.

  • Competition.

The key points of the policy are to provide additional funding for rural research, to support export activities and to strengthen Australia's biosecurity and quarantine capabilities.

State policy. The states' policies on agriculture are generally specific to particular industry sectors. Policies with respect to biotechnology and biodiversity, as with other agricultural policies, differ between states. Following the issue of licences for genetically modified (GM) organics in 2003, several states enacted moratorium legislation to delay the commercial release of GM canola. Those moratoria have now been lifted in all states other than Tasmania, which had a moratorium on the commercial release of GM organisms until 2014 and in January 2014 extended this ban for an indefinite period, and South Australia, where the moratorium on GM food crops is to continue until 2019.

Current overview of farming sector

Approximately 60% of the gross value of farm production in Australia is exported, with exports of grains, meat, fruit and vegetables, dairy products, processed foods and live animals dominating.

Family owned and operated farms comprise the majority of farming in Australia, by number of operation. However, in more recent years, Australia has seen increasing foreign investment and consolidation of farming businesses, resulting in larger operators enjoying economies of scale. Co-operatives strive to achieve economies of scale also, and these structures are encouraged by Australian governments (see Question 4).

Australia encourages foreign investment in agriculture which is assessed (on a case-by-case basis) to determine whether that acquisition is judged to be contrary to the national interest. The federal government has recently amended its policy in this area to increase the level of scrutiny of foreign investment in agricultural land, including by lowering the thresholds for assessment from AU$252 million to AU$15 million. There are also proposals to increase the scrutiny of foreign investment in agricultural businesses, including the lowering of thresholds from AU$252 million to AU$55 million.However overall the government maintains a strong bias in favour of offshore capital investment into Australian agriculture (see Question 3, Foreign investments: agriculture).

 

Acquisition of agricultural companies

3. Is the acquisition of domestic agricultural companies by foreign investors subject to special prior government approval(s)? Set out the approval procedures and the authorities involved.

Foreign investment regulation in Australia primarily consists of:

  • The Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA).

  • Australia's Foreign Investment Policy (Policy) as determined by the Australian Federal Treasurer.

More information about foreign investment regulation and policies in Australia is available at www.firb.gov.au.

Foreign investments: general

Under the FATA, the Australian Federal Treasurer (or delegate) reviews foreign investment proposals on a case-by-case basis to determine whether they are contrary to the national interest. The Treasurer can block foreign investment proposals or apply conditions, and in making determinations relies on advice from the Foreign Investment Review Board and the relevant state-based departments.

The Policy provides guidance on how the FATA is applied, and also sets out the investment categories and information that needs to be notified for prior approval (even if the FATA does not appear to apply).

All foreign government investors making a "direct investment" in Australia, regardless of the value of the investment or industry, or starting a new business or acquiring an interest in land, must apply for foreign investment approval. Foreign governments and their related entities include:

  • A body politic of a foreign country (or part of a foreign country, such as a state or province) or part of such a body politic.

  • A company or other entity in which a foreign government, its agencies or related entities have more than an aggregate 15% interest.

  • A company or other entity that is otherwise controlled by a foreign government, its agencies or related entities.

This means that entities such as state-owned enterprises and sovereign wealth funds are treated as foreign government entities rather than private enterprises in the context of the Australian foreign investment regime. It is important to note that there is no finite definition of what constitutes a foreign government entity and the above are guidelines only.

A "direct investment" is defined in the Policy as the objective of establishing a lasting interest in an asset(s), or a strategic long-term relationship with a target enterprise. The Policy provides that while it is common international practice to consider any investment of 10% or more as a direct investment, under Australia's foreign investment regime an investment proposal concerning interests below 10% must be notified if the acquiring foreign government or related entity can use that investment to influence or control the target. In particular, investments of less than 10% which include any of the following must be notified:

  • Preferential, special or veto voting rights.

  • The ability to appoint directors.

  • Contractual agreements including, but not restricted to, loans, provision of services and off-take agreements.

Generally, non-government foreign investors must apply for foreign investment approval if proposing to acquire a "substantial interest" (15% alone, or 40% with others, of the issued shares or voting power of a company), or acquire control (for example, by the acquisition of assets), of an Australian business valued at more than AU$252 million. This extends to investments in offshore companies with Australian subsidiaries or gross assets valued at more than AU$252 million. Higher thresholds apply to investors from the US, New Zealand, Chile, Japan, South Korea and China (AU$1,094 million, or AU$252 million in prescribed sensitive sectors). These thresholds are indexed for inflation in January of each year.

Foreign investments: agriculture

The Policy contains specific policy considerations for foreign investment proposals in agriculture. The Policy also differentiates between an acquisition of agricultural land and an acquisition of an agricultural business:

  • Agricultural land. A purchase of agricultural land by a non-government foreign investor which results in the cumulative value of agricultural land owned by the investor and its associates exceeding AU$15 million will require approval.

  • Agricultural business. Currently, the same rules outlined above apply to foreign investment in Australian agri-business as compared to other Australian companies or assets (see above, Foreign investments: general). However, there is discussion that the monetary thresholds for an investment in an agricultural business will be reduced to AU$55 million.

Due to the terms of free trade agreements entered into with the US, New Zealand and Chile, these lower thresholds for agricultural land and agricultural business do not apply to foreign persons from these countries and the general acquisition threshold of AU$252 million applies.

Also being developed and progressed by the Federal Government is a Foreign Ownership Register for agricultural land to more accurately provide information on the level of foreign ownership of agricultural land in Australia. The argument for a lower monetary threshold for an agricultural business reflects the sensitivity of this industry compared to other sectors in the Australian economy, including a material public opinion against foreign companies buying Australian farmland to grow crops or farm livestock and a realisation that there is continuing to be a global integration of Australian agriculture. A low threshold acknowledges these sensitivities and marks a policy decision to try to ensure transparency and scrutiny of foreign investment in the Australian agricultural industry.

Graincorp takeover

Public concerns about the transparency of decisions on foreign investment in Australia, highlighted by the rejection by the Federal Treasurer of the Archer Daniels Midland's proposed takeover of Graincorp in late 2013, have made this a key area of potential government reform. In particular, the concerns expressed over the Graincorp decision included:

  • A drawn-out approval process which commenced in May 2013 when ADM lodged its Foreign Investment Review Board (FIRB) clearance application and ended with the Treasurer's decision on 29 November 2013 with the application being withdrawn and re-submitted several times to fit within FIRB's workload and the processing of the application within the statutory timeline.

  • The reasoning for the Treasurer reaching a decision that the merger was contrary to the national interest was not transparent and his reasons were not well documented. In this regard, it is noted that the "national interest" concept is not defined term in the relevant foreign acquisition legislation despite the term being used throughout that legislation, and further the Policy document is not exhaustive of all matters taken into account by the Treasurer in reaching a decision. This leads to uncertainty and speculation.

  • The outright rejection of the merger without considering whether an approval was possible, subject to conditions applicable to ADM and the Graincorp business.

In reaching a decision it was acknowledged that:

  • The Australian grains industry applicable to Graincorp is an important export industry which has been transitioning through a significant deregulation process since 2008.

  • It has taken time for increased competition to emerge in this industry in Australia.

  • Graincorp accounted for about 85% of eastern Australia's storage, distribution and marketing of grains.

  • Many industry participants expressed concern that the merger would reduce competition.

It was judged, therefore, that allowing the merger to proceed could risk undermining public support for the foreign investment regime and ongoing foreign investment in Australia more generally.

 
4. Describe if specific legal forms (such as co-operatives) are regulated or used in the agricultural sector and whether they are open to foreign investment.

Several legal structures are commonly used in the agricultural sector in Australia, including:

  • Companies limited by shares.

  • Co-operatives.

  • Joint ventures (incorporated and unincorporated).

  • Various trust structures.

Companies limited by shares

Companies limited by shares are principally governed by the Corporations Act 2001 (Cth) and are the most common legal form for conducting business in Australia. The Act is national legislation and companies registered under the Act may conduct business throughout Australia. Companies registered under the Act can be broadly categorised as either:

  • Proprietary or private companies (which have a cap on the number of shareholders and restrictions on raising funds from the public).

  • Public companies (which may raise funds from the general public, subject to disclosure requirements contained in the Act, and may also be used as a vehicle for listing on a securities exchange).

Both forms of companies are suitable for foreign investment.

Co-operatives

Co-operatives have historically been commonly used in the agricultural sector. They are currently regulated at a state and territory level, meaning that co-operatives are generally restricted to conducting business in their jurisdiction of incorporation. However, a uniform "Co-operatives National Law" has been proposed which aims to harmonise co-operatives law throughout Australia. It was implemented by New South Wales and Victoria in March 2014, with other states and territories expected to follow.

Co-operatives in Australia are founded on co-operative principles, which include voluntary and open membership, democratic member control (one member, one vote) and active participation by members in the co-operative. However, co-operative structures make it difficult to raise and maintain a stable capital base, and to borrow against or realise assets. Together with the active membership requirement, this makes co-operatives not easily open to foreign investment.

Several examples exist of co-operatives undertaking "corporatisation" (restructures to convert the co-operative to a company limited by shares and, in some cases, listing them on a securities exchange) as a way to raise funds and attract investment, including by way of foreign takeover. There are also examples of joint ventures and unit trusts being established outside of the co-operative structure in order to enable foreign investment or to enable certain economic interests in the co-operative's assets or business to be unlocked.

 
5. To what extent does competition (anti-trust) law apply to agriculture?

Australian competition law consists of:

  • The Australian Competition and Consumer Law Act 2010 (Cth).

  • The Australian Competition and Consumer Law Regulations 2010 (Cth).

  • Policies developed by the Australian Competition and Consumer Commission (ACCC).

Australian competition law applies to agricultural businesses in the same manner as other businesses in Australia. As a result, if the acquisition of an agricultural business would substantially lessen competition, or if the business is conducted in a manner that breaches these laws, that transaction is prohibited. More information about Australian competition law is available on the ACCC website at www.accc.gov.au/.

Australia's competition law is also currently under review by the Australian Government. Submissions on the issues paper closed on 10 June 2014 and a draft Report was released on 22 September 2014. More details of the review are available at http://competitionpolicyreview.gov.au/.

 

Acquisition of agricultural land

Sale and transfer of usage rights and ownership

6. Set out the domestic laws that apply to the acquisition of:
  • Usage rights to agricultural land.

  • Ownership of agricultural land.

In Questions 6 to 14, where relevant laws are state or territory based and therefore vary between each Australian state and territory, the authors have focused on the laws of the state of New South Wales (NSW) and used examples from NSW.

In most situations, Australian laws which apply to the ownership and usage of land for agricultural purposes are the same as the laws for general land ownership and usage. However, some forms of interest in land are used more often for agricultural purposes than other purposes. Examples of these include profit à prendre and forestry rights.

A profit à prendre is a right to take from the land owned by another person part of the natural produce grown on that land or part of the soil, earth or rock comprising the land. Examples of a profit à prendre include rights to graze stock, plant and harvest crops, quarry stone, sand or gravel, or take timber.

A forestry right is defined in section 87A of the Conveyancing Act 1919 (NSW) as an interest in land in which the person having the benefit of the interest is entitled to:

  • Enter the land.

  • Establish, maintain and harvest a crop of trees on the land.

  • Construct and use buildings, works and facilities as may be necessary or convenient to enable the person to establish, maintain and harvest the crop.

A forestry right is a form of profit à prendre. It was established to facilitate plantation projects, particularly for commercial timber production or carbon sequestration. (The Conveyancing Act also establishes carbon sequestration rights in respect of land.)

Water is a scarce resource in Australia. To manage its use efficiently, and to reduce the risk of over-allocation of water rights, most Australian states and territories have legislation which controls water access and usage strictly, and many states and territories provide for ownership of, and interests in, water separately from land. Consequently, a person transacting in agricultural land should consider carefully what water rights will attach to that land, and whether the person should be transacting separately for water rights as well.

In most areas of NSW, for example, water rights are considered to be personal property, and can be transacted and securitised separately from land.

 
7. Are there any legal restrictions on the acquisition of agricultural land (or usage rights) by a foreign (or foreign invested) party?

There are some restrictions on the acquisition of land by a foreign party where the land is wholly and exclusively used for the carrying on of a primary production business. According to Australia's Foreign Investment Review Board (FIRB), if the rural land is used for a primary production business (which includes production from the cultivation of land, animal husbandry/farming, horticulture, fishing, forestry, viticulture or dairy farming), then a foreign person needs approval from FIRB to buy an interest in the rural land if the cumulative value of rural land that the foreign person (and any associates) holds exceeds, or immediately following the acquisition is likely to exceed, AU$15 million. However, a different threshold applies to some countries:

  • Investors from New Zealand, Chile and United States need FIRB approval where the total assets of the business to be acquired exceed AU$1.094 billion.

  • Investors from Thailand and Singapore need FIRB approval where the total assets of the business to be acquired exceed AU$50 million.

Although this approval regime was amended recently, it is still under review and further changes are expected.

In some situations, large scale acquisitions of water entitlements by a foreign person might be subject to FIRB approval.

 
8. Are there any compulsory tendering or prior approval procedures required for a sale and purchase of agricultural land? Briefly describe these procedures and the approval authorities (if any).

There are no compulsory tendering or approval procedures for the sale and purchase of agricultural land or water.

In New South Wales (NSW), section 55(3)(d) the Local Government Act 1993 (NSW) specifically states that the usual requirements and controls in that Act for tendering by a local council do not apply for the sale of land by a local council.

However, there are often controls on the sale of land by government authorities, or the transfer of interests in land owned by government authorities, whether or not it is agricultural land. The following are examples in NSW:

  • Land classified under the Local Government Act 1993 (NSW) as "community land" must be reclassified as "operational land" under that Act before it can be sold.

  • Most land in the Western Division of NSW (which is a large, sparsely populated area towards central Australia) is Crown land and much of it is subject to long-term leases (known as "pastoral leases"), usually for purposes such as grazing, agriculture and mixed farming, under the Western Lands Act 1901 (NSW). Ministerial approval is required for the creation and transfer of these leases, and other controls apply to transactions in the leases.

 
9. Does the law and/or regulations prescribe minimum land purchase prices if the (local) government sells agricultural land?

There are no legislated minimum land or water purchase prices if a local council sells agricultural land or water.

 
10. Is there a maximum term applicable to the lease (or use) of agricultural land?

Generally, leases can be granted for a fixed number of years as agreed between the landlord and tenant. However, if a lease is to be registered on the statutory land titles register, which is different for each state and territory, the parties must follow the requirements for lease registration in the relevant state or territory, and those requirements sometimes include restrictions on the length of the lease term.

There are also some specific statutory controls. The following are examples in New South Wales (NSW):

  • The Agricultural Tenancies Act 1990 (NSW) governs some aspects of leasing arrangements between owners, tenants and sharefarmers of agricultural land. However, the Act does not prescribe a maximum term for leases of agricultural land.

  • Western lands leases (see Question 8) can be granted either in perpetuity or for a term not exceeding 40 years (section 28A, Western Lands Act 1901 (NSW)), and can be extended for further terms not exceeding 40 years in each case (section 28B).

  • Crown land in NSW can be leased for up to 100 years (sections 34 and 41, Crown Lands Act 1989 (NSW)).

  • Most states and territories have restrictions on the duration of a lease of part of a parcel (or lot) of land. In NSW, the time limit is generally five years (section 23F, Conveyancing Act 1919 (NSW)).

  • Some states and territories allow the transfer of specific annual allocations of water under a water entitlement. Usually, these transfers cannot cover more than one year of allocations. However, recent legislative amendments in NSW (which have not yet commenced operation) will extend that in some situations.

  • The Conveyancing Act 1919 (NSW) states that a lease for a term of more than 300 years may be converted into a freehold interest in the leased premises, if there are more than 200 years still to run on the lease and various other criteria are satisfied (section 134).

 
11. In which circumstances can the government authorities expropriate agricultural land?

There is specific legislation at the federal level, and in most states and territories, which allows specified government authorities to acquire land by compulsory process (that is, expropriate the land), whether it is agricultural land or not. Usually, the acquisition must be for a specified purpose of the acquiring authority (for example, railway purposes if the acquiring authority is a rail authority). In addition, in some cases, Ministerial approval for the acquisition is required. All legislation provides a specific process for the acquisition.

The Australian Constitution requires that any acquisition of property by the federal government must be "on just terms". The relevant federal, state and territory acquisition legislation provides for compensation for the acquisition, which goes beyond the market value of the acquired land.

Water entitlements can also be compulsorily acquired by a government authority. If this occurs, the dispossessed owner is entitled to compensation for the market value of the water entitlement. In New South Wales, compulsory acquisition can only occur if, in the special circumstances of the case, the public interest requires the compulsory acquisition of the specific water entitlements.

Tax and financing

12. Which taxes apply with respect to the sale and transfer of land ownership (or usage rights)?

Taxes which may apply in relation to the sale and transfer of land include:

  • Goods and services tax (GST) (currently 10%).

  • Capital gains tax (currently 30% for companies) (at the federal level).

  • Stamp duty and land tax (which are state and territory based, and the rates of which may vary).

GST is payable by the seller where the sale of property is considered to be a "taxable supply". This will generally be the case where the sale is made in the course or furtherance of an enterprise carried on by the seller. Concessions apply for residential property other than "new" residential premises.

There are also exemptions for GST in relation to:

  • Selling or leasing farmland or land which is subdivided, and concerning which a farming business has been carried on for at least five years.

  • Selling of a going concern (such as a leasing or farming enterprise).

In some situations, the transfer of water entitlements is not subject to GST.

According to the New South Wales (NSW) Office of State Revenue, a sale or transfer of land or business assets in NSW or a declaration of trust over dutiable property in NSW incurs stamp duty, if the value of the relevant transaction exceeds a prescribed threshold. Duty is calculated according to a schedule of rates which vary according to the transaction value.

In NSW, stamp duty is not payable on all components of a water entitlements transaction, and this should be considered specifically for each transaction.

Most real estate other than a principal place of residence is subject to capital gains tax. This includes vacant land, business premises, rental properties, holiday houses and hobby farms. A capital gain or capital loss is the difference between what an asset cost and what the asset owner received when the owner disposed of the asset.

Land tax is applied to the aggregate value of any properties which a person owns or jointly owns that is above the land tax threshold as at midnight on 31 December in any given year. There are a number of exemptions to land tax including a principal place of residence and land which is used for primary production purposes. Whether the primary production purpose exemption applies depends on the classification of land under a land use planning instrument. Land is considered to be "rural" (and therefore potentially within the land tax exemption) if it is zoned rural, rural residential or non-urban in such an instrument.

 
13. Does your jurisdiction have special regulated agri/green-parks and is (foreign) investment in such parks incentivised? If so, what incentives apply in general?

There are no specially regulated agri/green-parks as yet in Australia.

 
14. Briefly describe the procedures to mortgage/pledge agricultural land rights in order to acquire domestic financing.

Typically, lending in relation to agribusiness is treated as asset lending rather than cash flow lending, with the principal focus being on security value. Banks may also impose financial covenants and reporting of actual versus projected cash flow, but it is very unusual for any agribusiness lending to be done without asset security. The typical securities are:

  • Land mortgages.

  • General security deeds (which constitute a security over all business assets, much like the old style equitable charge).

In addition, specific securities over crops, livestock and water rights are typical.

Australia has a Personal Property Securities Act with a collateral register (which is similar to the Canadian and New Zealand systems) and which regulates the creation, priority and enforcement of all personal property securities over agribusiness assets (including crops) other than land and some water rights. Registration under that system is essential and priority is generally determined by the order of registration. Certain securities (notably securities over crops and livestock among others) can attract super-priority status if certain requirements are met and they are made by specific rather than general registrations in respect of the relevant property.

 

Crop seed business

15. Which domestic laws and regulations regulate the crop seed industry and which domestic authorities/agencies supervise this sector?

Domestic laws and regulations

The crop seed industry in Australia has been largely self-regulated since the repeal of seed legislation in each state (other than Tasmania) and the replacement of the legislation with voluntary seed certification schemes. However various pieces of state and federal legislation which regulate the import and export of plant products, biosecurity, genetically modified organisms and intellectual property in connection with plant products apply in various ways to the conduct of business within the crop seed industry. Such legislation includes the:

  • Quarantine Act 1908 (Cth).

  • State biosecurity Acts (for example, the Biosecurity and Agriculture Management Act 2007 (WA), the Biosecurity Act 2014 (Qld) and the Plant Biosecurity Act 2010 (Vic)).

  • Gene Technology Act 2000 (Cth) and corresponding state legislation.

  • Plant Breeders Rights Act 1994 (Cth).

  • Patents Act 1990 (Cth).

In relation to genetically modified crops see Questions 25 to 31, and in relation to IP rights in plants (plant variety rights) see Questions 20 to 24.

Under the Quarantine Act 1908 (Cth) and the state biosecurity legislation, the federal government and the various states and territories may prohibit or restrict the import of plants and other items (including crop seed) into Australia or the relevant state or territory. The prohibitions or restrictions are directed towards preventing the introduction or spread of diseases or pest species. The applicable state or territory quarantine restrictions should be checked before bringing crop seed into the relevant state or territory.

The Seeds Act 1985 (Tas) imposes various requirements and restrictions in relation to the sale and labelling of crop seed in Tasmania.

Australia has adopted the international phytosanitary (plant health) standards developed by the Secretariat of the International Plant Protection Convention (IPPC). Australia's IPPC Secretariat aims to ensure that the IPPC plant health standards are effective and consistent with Australia's trading goals. At a federal level, the Biosecurity Service Group Division of the Department of Agriculture, ensures that Australia's biosecurity, export and import obligations under the IPPC are carried out. State agricultural departments are responsible for implementing internal and interstate quarantine controls provisions that aim to achieve compliance with Australia's obligations under the IPPC, such as the plant diseases control schemes of each state and territory.

Domestic authorities

Historically, seed certification schemes in Australia have been conducted at a state and territory government level with state-based designated authorities. In June 2002 an industry lead proposal (from the Australian Seed Federation (www.asf.asn.au) and the Grains Council of Australia (closed in 2010)) resulted in the formation of the Australian Seeds Authority (ASA; www.aseeds.net.au). The Commonwealth Department of Agriculture Fisheries and Forestry delegated under licence to the ASA the role of National Designated Authority for the Organisation for Economic Co-operation and Development (OECD) Schemes for the Varietal Certification or the Control of Seed Moving in International Trade (OECD Schemes), and the Australian Seed Certification Scheme. The rules of the Australian Seed Certification Scheme are essentially the same as for the OECD Seed Schemes, with only a few differences in the requirements for post-control testing. Funding for the ASA is primarily achieved through membership fees (that is, fees from individuals and companies working in the seed industry) and a range of fees and charges levied against certified seed production.

Apart from seed certification, the agricultural departments of each state and territory government have quarantine functions and responsibilities in relation to checking seed brought into that state or territory.

Industry bodies

The ASA has equal membership from Australia's two national peak seed industry organisations, the:

The GPA represents seed grower interests. The ASF represents the commercial seed sector. The ASF also operates on an international platform as a member of the International Seed Federation (ISF) and the Asia Pacific Seed Association (APSA). Seed resellers are responsible for ensuring certified seed is sold in accordance with state or territory seed legislation (where still applicable, that is in Tasmania) and/or the ASF National Code of Practice for Seed Labelling and Marketing. The ASF National Code of Practice guidelines are only mandatory for ASF members.

Agencies

To ensure the operational procedures of seed certification are met, the ASA has granted service delivery accreditation to three certifying agencies, Seed Services Australia, AsureQuality and Agwest Plant Laboratories, through formal Authorisation Agreements. To achieve national uniformity, each of these Agencies must conduct the scheme in accordance with the applicable ASA Technical Standard and submit to independent auditing by the National Association of Testing Authorities (NATA).

 
16. State the approvals/licences that are required to engage in the following activities:
  • Import of new plant species or varieties and import of crop growing technologies.

  • Set up of R&D centres and use of test plots of new crops.

  • Crop seed production.

  • Commercial crop production.

  • Distribution of seeds or crops (wholesale/retail/e-commerce).

Import of new plant species or varieties and crop growing technologies

A person seeking to import quarantine materials should first check the Department of Agriculture's Import Conditions Database (ICON) for existing conditions of entry. An Import Permit may need to be obtained by submitting an Application for Permit to Import Quarantine Material to the Department. Seed consignments imported into Australia for all end uses must meet the Department's standards for seed contaminants and tolerances. These are contained in a table provided on the Department's website.

Set up of R&D centres and use of test plots of new crops

There are no specific rules or restrictions for foreign companies in relation to R&D and the use of test plots of new crops generally, however see Question 28 in relation to genetically modified crop test plots.

The OECD has established guidelines for control plot tests and field inspection of seed crops as part of the OECD Seed Schemes. Those guidelines apply in Australia through the implementation of the OECD Schemes in the manner discussed above.

Grain-related research and development (R&D) is co-ordinated by the Grains Research and Development Corporation (GRDC; www.grdc.com.au). The GRDC is a statutory corporation, which was founded under the Primary Industries Research and Development Act 1989 (Cth). Its primary objective is to drive the discovery, development and delivery of world class innovation to enhance the productivity, profitability and sustainability of Australian grain growers and benefit the industry and the wider community.

The GRDC is funded primarily through a grower levy and government contributions. The levy is based on the net farm gate value of the annual production of 25 different crops made up of coarse grains, pulses and oilseeds.

Applications for R&D are on a tender basis, whereby an evaluation team considers the priorities of the various programmes, selection criteria, cost analysis, the portfolio of the GRDC and the beneficial outcomes of accepting the applicant. The GRDC also invites expressions of interests to be submitted for programmes.

The Sugar Research and Development Corporation (www.sugarresearch.com.au), Cotton Research and Development Corporation (www.crdc.com.au) and Rural Industries Research and Development Corporation (www.rirdc.gov.au) perform similar functions (on a similar basis) to the GRDC in respect of sugar-related, cotton-related and rice and pasture seed-related R&D, respectively. Each of those bodies are also statutory corporations established by the Federal government under the Primary Industries Research and Development Act.

Crop seed production

Seed breeders must ensure that certain standards are met in order to be certified by the ASA. Otherwise, there are no licensing requirements for producers of crop seed (whether foreign or domestic).

The ASA is responsible for controlling seed certification in Australia through implementation of the Australian Seed Certification Scheme and the OECD Schemes. Those schemes ensure that buyers of a variety of seed get crop or pasture plants with the characteristics selected by the breeder.

The ASA has released the National Seed Quality Standards for Basic and Certified Seed which prescribes minimum purity and germination standards under both schemes for seed certified in Australia and intended for marketing in Australia.

Commercial crop production

Under the Plant Breeder's Rights Act 1994 (Cth), plant breeder's rights (PBR) give the holder exclusive marketing rights to a registered plant variety. The holder of a PBR can authorise a licensee to, among other things, produce or reproduce the material, offer the material for sale or export the material. Private use, for non-commercial purposes, and use for experimental purposes will not infringe the PBR.

Where a seed variety is sold to a grower, a legally binding contract is formed between the PBR owner or the licensed commercialisation party and the grower. Growers cannot sell, trade, barter or give away seed of a variety protected by PBR for propagation unless the PBR contract allows. To improve efficiency and uniformity, an industry standard licence has been established. The PBR contract also sets out payment conditions of end point royalties (EPR), which are payable to the owner of a plant variety for the right to grow that variety.

There are no particular restrictions on commercial crop production by foreign entities. In relation to genetically modified crops see Questions 25 to 31.

Distribution of seeds or crops

The OECD Schemes provide requirements which must be met where seed is to be exported internationally (see above, Crop seed production).

A PBR agreement will encompass distribution rights for a grower and commercialised licensee (see above, Commercial crop production). Some contracts allow growers to freely trade varieties between each other, but may be limited to trade within a state.

It is necessary to comply with quarantine, biosecurity and plant diseases control requirements in relation to the import of foreign seed into Australia and in each state or territory to which seeds or crops are distributed (see above, Domestic laws and regulations).

 
17. Set out the domestic labelling requirements in the crop business sector.

Under the Mutual Recognition Act 1991 (Cth), goods produced in, or imported into, one state, may be sold in a second state without having to meet further standards and requirements of the second state (for example, packaging and labelling standards).

A Code of Practice prepared by the Australian Seed Federation (ASF) endeavours to achieve national uniformity concerning the labelling and marketing of seed for sowing, and applies to all members of the ASF. The Code applies to seeds sold or supplied for the purpose of sowing. It does not apply to seeds used for breeding or experimental purposes or seed used for stock-feed or birdseed, provided they are so labelled.

The Code lists the mandatory minimum details required to be on a label or parcel, including:

  • The species: the common or botanical name of each species present in the seed lot in a proportion by mass or percentage.

  • Chemical/additive treatment: all of the chemical/additive treatment to which the seeds have been subjected.

  • Biological treatment: any biological treatment to which the seeds have been subjected.

  • Details of application: the date of application, batch or lot number and the name and address of the person/company who applied the treatment.

  • Mass of parcel: the net weight of the contents, or number of seeds. For single species of coated or pelleted no horticultural seed, where the coating or pelleting process adds more than 5% to the weight of the bare seed and is packed in parcels of 10 kilograms or more, it is mandatory for one of the following to be present on the label:

    • the percentage by weight of seed; or

    • the seed count expressed as seeds/pellets per kg or thousand seed weight.

  • Lot designation: a number, brand or code which identifies the seed lot from which the parcel was drawn. This must be visible when stacked.

  • Seller: the name and address of the seller, distributor or packer of the seeds or a registered brand identifying the name.

  • Analysis certificate: parcels of agricultural seeds are to have the following immediately visible on the label: "a seed testing analysis certificate is available on request".

The Seeds Act 1985 (Tas) sets out similar mandatory labelling requirements which apply to packaging of seeds in Tasmania.

 
18. Are there any restrictions on foreign direct investment (FDI) in this sector?

There are no special FDI restrictions which apply to the crop seed industry in Australia. For general FDI restrictions on acquisitions of agricultural companies and land, see Questions 3 to 6.

 
19. Summarise landmark or recent cases that have defined the law and practice in this sector.

The Baxter case concerning the liability of a grain grower who used genetically modified canola for the loss of his neighbour's organic certification is the only recent case of any significance for the crop seed industry (see Question 31).

The major recent developments in the regulation of the crop seed industry have been:

  • The deregulation of the sector, with specific legislation in relation to the crop seed industry being repealed over the last 15 years to make way for voluntary certification schemes aimed at maximising market confidence in the standard of production, and especially the genetic purity, of specific seed varieties.

  • Recent state biosecurity legislation aimed at strengthening the biosecurity regimes which apply generally within Australian states.

 

Plant variety rights (PVR)

20. Has your jurisdiction ratified the International Convention for the Protection of New Varieties of Plants 1961 (UPOV Convention) and its revisions in 1972, 1978 and 1991?

On 1 February 1989, the Australian Government acceded to the International Convention for the Protection of New Varieties of Plants 1961 (UPOV Convention) of 1961, as revised on 10 November 1972, and on 23 October 1978. The Australian Government acceded to the 19 March 1991 revision of the UPOV Convention on 20 December 1999, which came into force on 20 January 2000.

 
21. Briefly describe the registration process for PVR in your jurisdiction.

New plant varieties in Australia can be registered under the Plant Breeder's Rights Act 1994 (Cth) (PBR Act). Applications are made to the Registrar of Plant Breeder's Rights and must satisfy a two-part process.

The first part of the PBR application requires (section 26(2), PBR Act):

  • Details of the applicant and breeder.

  • The origin of the plant variety (including comparisons to similar plant varieties).

  • Photographic evidence of the plant variety for examination.

  • A certified copy of any foreign PBR application (if applicable).

Once the PBR application is accepted, the plant variety proceeds to "provisional protection" (sections 30 and 39(1) , PBR Act).

The second part of the PBR application is the examination. As part of the examination, the applicant must file the following within 12 months after acceptance of the PBR application (section 34, PBR Act):

  • Particulars of the distinguishing features of the plant variety (including the particulars of any growing trials).

  • A certificate completed by a "qualified person" to verify the particulars submitted in this part of the PBR application.

Before the PBR application proceeds to registration, propagating material for the plant variety must be given to a genetics resource centre (section 44(1)(b)(vii) , PBR Act) and a specimen plant must be submitted to an official herbarium (section 44(2), PBR Act). The propagating material is then used to conduct a growing trial to verify the distinctness, uniformity and stability of the plant variety.

Following examination, the particulars of the PBR application are then published in the Plant Varieties Journal. The PBR application is then open for objection for a period of six months after the particulars are published (section 35, PBR Act).

 
22. Briefly describe the laws and procedures of your jurisdiction covering the protection of PVR in terms of:
  • Requirements for protection.

  • Extent of the protection.

  • Restrictions on the rights of the PVR holder.

  • Farmer's privilege.

Requirements for protection

Section 43 of the Plant Breeder's Rights (PBR) Act states that a PBR application will be registered if the following grounds are satisfied:

  • The variety has a breeder. A plant variety has a breeder if it is developed through human intervention and not though a spontaneous occurrence (sections 3(1) and 5).

  • The variety is distinct. A plant variety will be distinct if it is distinguishable from another plant variety whose existence is a matter of common knowledge (section 43(2)).

  • The variety is uniform. A plant variety will be uniform if, subject to the variation that may occur by its propagation, it is uniform in its relevant characteristics (section 43(3)).

  • The variety is stable. A plant variety is stable if its relevant characteristics remain unchanged after repeated propagation (section 43(4)).

  • The variety has not been exploited or only recently exploited. A plant variety is taken to have been exploited if, at the date of lodging the application, the plant material has been sold to another person by, or with the consent of the breeder (section 43(5)).

Extent of the protection

Article 19 of the UPOV Convention and PBR Act sets out that trees and vines are protected for a minimum of 25 years from registration, and all other plants are protected for a minimum of 20 years (section 22, PBR Act). However, the UPOV Convention also provides that countries are free to provide protection for a longer period.

In Australia, the Plant Breeder’s Rights Advisory Committee (PBRAC) is charged with assessing requests to extend the duration of protection. If granted, the extension applies to all PBR of plant varieties within a specific category, and not only the specific plant variety in question.

An individual seeking an extension must apply to PBRAC indicating:

  • The length of the requested extension, and whether the extension is permanent or for a defined period.

  • Reasons why the extension is being sought, including describing the problem and how the extension will address it.

  • The category of plant variety for which the extension is sought.

  • An explanation of why government action to extend the duration of PBR is justified.

The Minister will consider the merits of the application and may decide not to extend the duration of PBR, to adopt alternative Government action or to extend the PBR.

Restrictions on the rights of the holder

Under the PBR Act, a breeder's rights do not extend to acts done privately and for non-commercial purposes (section 16(a)). This also includes acts done for experimental purposes (section 16(b)). There is no requirement to obtain consent from, or pay any form of remuneration or royalties to, the PBR owner in respect of such use.

Further, a breeder's rights do not extend to acts done for breeding of other varieties. Unless an exemption applies, this also includes new varieties bred from a plant variety covered by PBR (section 16(c)).

Farmer's privilege

Under Article 15(2) of the UPOV Convention, member states are entitled to introduce laws allowing farmers, who have planted a protected variety on their own land, to use the product of the harvest for further propagation.

Australia has included this exception under the PBR Act, unless the plant variety is declared as a category to which the exception does not apply (section 17(2)). Under section 17(1) of the PBR Act, a farmer who saves harvested propagating material and uses that material for the production of propagating material is exempt from infringing PBR in reproducing the seed. Farmers cannot do anything "beyond its further use as farm saved seed" without the authorisation of the PBR owner (Cultivaust Pt Ltd v Grain Pool Pty Ltd (2004) 62 IPR 11).

 
23. Which legal actions are available to owners of PVR in the event of PVR infringements?

An action for infringement of plant breeder's rights (PBR) (section 53, PBR Act) can be brought in the Federal Court (section 54(1)) where the Court may grant an injunction and damages or an account of profits (section 56(3)). A defendant may also seek revocation of the PBR on the basis that the plant was not a new variety (section 54).

Under the PBR Act, an individual may be held criminally liable if found to be intentionally infringing PBR (section 74) or intentionally misrepresenting themselves or a plant variety as being covered by PBR (section 75).

 
24. Summarise landmark or recent cases that have defined the law and practice in this sector.

In the case of Elders Rural Services Australia Ltd v Registrar of Plant Breeder’s Rights [2012] FCAFC 14, the full Federal Court clarified the relationship between the current Plant Breeder’s Rights Act 1994 (Cth) (new Act) and the repealed Plant Variety Rights Act 1987 (Cth) (old Act).

In the old Act, the rights were known as plant variety rights (PVR) and, under the new Act, they are known as plant breeder's rights (PBR). The case involved a number of issues regarding the transitional application of the new Act.

The case established that if a grant of PVR was made, it is considered a grant of PBR under the new Act, and the applicable rights under the new Act apply.

 

Genetically modified (GM) crops

25. Has your jurisdiction ratified the Cartagena Protocol on Biosafety 2002? What is the domestic policy with respect to GM crops?

Australia has not ratified the Cartagena Protocol, but has implemented its own scheme to regulate gene technologies.

Australian government policy is supportive of gene technology as it assists with emerging challenges (global food supply) and benefits the environment (reduced chemical usage) and consumers (products with greater health benefits).

The Australian government's Grains Research and Development Corporation invests in the development and use of gene technologies and GM crops where it is considered this will provide substantial agronomic, environmental or economic benefits.

Individual states and territories are empowered to decide whether to allow GM crop production in part or all of that state or territory.

Moratoria were recently extended to prohibit commercial release of GM organisms (GMOs) indefinitely in Tasmania, and until at least 2019 for GM food crops in South Australia. The Australian Capital Territory has a moratorium in place prohibiting the commercial release of GM canola.

Specific exemptions apply in Western Australia and New South Wales permitting the commercial cultivation of GM canola. GM cotton is also permitted in certain parts of Western Australia. In March 2015, the Western Australian government foreshadowed allowing GM cropping without the need to obtain approval. However, the current opposition remains publicly committed to a no-GM crops policy.

Queensland and the Northern Territory have not introduced moratorium legislation. Victoria currently has no moratoria in place.

 
26. Describe the domestic laws regulating genetic engineering. Which authority(ies) is(are) responsible for approving GM crops. Set out the permit requirements and prohibitions as well as sanctions in the event of infringement.

Through the intergovernmental Gene Technology Agreement 2001, commonwealth, state and territory governments agreed to establish a nationally consistent regulatory system for gene technology.

The framework for GMO regulation comprises the Gene Technology Act 2000 (Cth), the Gene Technology Regulations 2001 (Cth) and corresponding state and territory legislation. The Gene Technology Regulator administers and enforces the Act.

The framework operates on three levels:

  • GM crops must be assessed by the Regulator before being released and grown commercially.

  • GM foods must be assessed as safe for human consumption by Food Standards Australia New Zealand (FSANZ) before being approved for sale.

  • GM food must be labelled in accordance with the requirements of the Australia New Zealand Food Standards Code, for consumer awareness purposes.

The Act prohibits any dealing with a GMO unless that dealing is:

  • Licensed by the Regulator for contained use or intentional release into the environment.

  • A Notifiable Low Risk Dealing.

  • An exempt dealing.

  • On the Register of GMOs.

The Regulator has extensive powers to monitor and enforce licence conditions. Criminal liability can arise for dealings with a GMO without a licence or breaching conditions of a GMO licence, with maximum penalties of five years' imprisonment or an AU$340,000 fine.

Penalties apply under relevant state or territory legislation for cultivating a GM crop outside of permitted designated areas.

 
27. Which safety evaluations are legally required before GM crop commercial market entry? How are GM crops regulated?

Licence applications

The Gene Technology Regulator is responsible for issuing licences for dealings with GMOs, including setting requirements and providing authorisations for field trials and commercial plantings.

The Regulator may issue a licence only where satisfied that any risks can be managed (including by imposing licence conditions) to protect the health and safety of people and the environment. The Regulator must prepare a risk assessment and risk management plan, having regard to various matters, including submissions received, relevant policy guidelines, and advice received from prescribed agencies and authorities.

It may take up to 255 working days to make a decision, depending on the specific dealings to which a licence application relates.

Pre-market assessment of GM foods

Food Standards Australia New Zealand (FSANZ) is responsible for carrying out the pre-market assessment of GM foods as set out in Standard 1.5.2 Food Produced Using Gene Technology of the Food Standards Code. It is standard practice for GM animal feed to undergo the same approval process (licence conditions prevent its use until approval is obtained).

Broadly, the safety assessment examines GM food on a case-by-case basis applying the Codex General Principles for the Risk Analysis of Foods Derived from Biotechnology. The objective is to consider whether the GM food is comparable to a conventional counterpart food, rather than establishing the absolute safety of the GM food.

The developer must provide comprehensive evidence of quality-assured raw experimental data, which is assessed together with information available in scientific literature, in other applications and from government agencies and the public.

Once a GM food has passed the safety assessment and approval process, it is listed in Standard 1.5.2, and may be sold in Australia and used to make other foods.

 
28. Describe the GM crop test plot regulations and requirements.

The Gene Technology Regulator has power under the Gene Technology Act 2000 to grant licences that allow for limited and controlled release of GM crops into the environment. The principal purpose of the licence is to enable the licence holder to conduct field trials for early-stage research under strict controls aimed at mitigating the risk of GMOs or GM material entering the environment and also the commercial food or feed supply.

The Act requires the licence to incorporate a number of measures to severely restrict the dissemination and persistence of the GMO and its generic material into the environment, and for trials to be limited in terms of spatial scale, location and duration. Additional legislative controls include specified methods of disposal of the GMO or its generic material, data collection requirements, a restricted geographical area in which the proposed dealings may occur, and compliance with codes of practice and technical or procedural guidelines.

To date, the Regulator has issued licences for small field trials of a broad range of GM crops, including banana, sugar cane, barley, pineapple, papaya, and wheat. Currently most prominent are the GM wheat trials, which by way of example are subject to strict containment conditions to manage the potential for genetic transference, spread and persistence of the GM wheat and the introduced genes in the environment. The Regulator actively inspects trials to ensure compliance with licence conditions.

 
29. Describe pre-market approval requirements (and approval timelines) to grow, produce and sell GM food or feed. Provide details on the competent approval authorities.
 
30. Set out the domestic product genetically modified organism (GMO) content labelling obligations (or the absence of them) and sanctions in the event of non-compliance or inaccurate content labelling.

Under Standard 1.5.2 Food Produced Using Gene Technology of the Food Standards Code, packaged GM food must state "genetically modified" on its label in conjunction with the name of that food, ingredient or processing aid.

Additional labelling may be required in particular circumstances, such as where GM food contains a new factor known to cause an allergic response. Specific labelling may not be required in others, such as where there is unintentional presence of GM food of no more than 1% per ingredient.

These labelling requirements do not apply to animal feed, which is generally managed by industry and is ultimately the responsibility of the states and territories.

The Food Standards Code, including as to labelling, is enforced by the Australian states and territory food regulators (government departments, statutory authorities or local governments) through individual food legislation which set out relevant offences and sanctions.

Representations about food are subject to Australian consumer protection laws prohibiting false, misleading or deceptive conduct, which are enforced jointly by the Australian Competition and Consumer Commission and state and territory Australian consumer law regulators.

 
31. Summarise landmark or recent cases that have defined the law and practice in this sector.

The recent landmark decision of the Supreme Court of Western Australia (Marsh v Baxter [2014] WASC 187) has attracted widespread global interest. It is the first legal proceeding of its kind.

The claim was brought in negligence and nuisance (for pure economic loss) by a certified organic farmer against his neighbour, who had grown and harvested a legal GM canola crop.

The organic farmer alleged that incursion of GM plant material and seeds from the neighbouring farm caused decertification of 70% of his farm. The organic farmer did not grow canola. The certifying organisation National Association for Sustainable Agriculture, Australia (NASAA) decertified the organic farmer and withdrew the contractual right to apply NASAA's label when selling crops and livestock on grounds that considered the incursion an unacceptable risk of contamination.

The Court dismissed the claim. The true cause of any loss was said to be NASAA's erroneous application of its Standard (particularly its failure to recognise and apply the distinction between a deliberate or negligent exposure by an operator as opposed to a clearly adventitious incursion (as was the case)) and its gross overreaction to what was an unsupportable decertification. NASAA's Standard called for an assessment of whether a product had been contaminated. In this case, there was no identified or plausible risk of contaminated product or risk of genetic transfer between GM and organic crops.

The Court emphasised the prevailing cautious and incremental approach in Australia to pure economic loss negligence claims. It considered no basis existed to extend the law to the novel and onerous duty of care contended for by the organic farmer, particularly given the realities of large-scale broad acre farming.

The nuisance claim required the Court to balance numerous considerations in finding against the organic farmer, including the:

  • Legitimacy of the neighbour's farming conduct, including the use and swathing of GM canola as a weed management tool.

  • Absence of evidence of physical injury or genetic transference risks from the GM incursion.

  • Self-imposed vulnerability to economic loss of the organic farmer from the private idiosyncratic contractual arrangements with NASAA.

The decision is listed for appeal in April 2015, but has already had an impact. The Organic Industry Standards and Certification Council is considering an application to allow minimum levels of "advantageous contamination" (provided GM material is undetectable in final products), having rejected an application in December 2014 to incorporate a 0.9% tolerance in the national standards. NASAA has advised that it will undertake a review of its processes.

 

Importing animals and gene patents

32. Summarise the import/export control measures for animals and genetic resources.

Australia has a reasonably complex system for controlling importation of animals and animal products. The legislative scheme is made up of the Quarantine Act 1908 (Cth) and the Quarantine Proclamation 1998. The importation of live animals requires an import permit while the importation of animal parts (including animal reproductive material) generally requires an import permit (sections 37 and 38, Quarantine Proclamation).

In deciding whether or not to grant an import permit, the Director of Quarantine has regard to Import Risk Analyses prepared for the commodity. Those analyses determine whether a commodity should be permitted to be imported and, if so, the conditions which should be applied. That analysis is informed by Australia's "Appropriate Level of Protection" which is "currently expressed as providing a high level of sanitary and phytosanitary protection, aimed at reducing risk to a very low level, but not to zero" (Source: Department of Agriculture, Fisheries and Forestry, Import Risk Analysis Handbook 2011 (available at www.agriculture.gov.au/SiteCollectionDocuments/ba/publications/qmacconference2003/import-risk-analysis-handbook-2011.pdf)).

The exportation of live animals and animal reproductive material is regulated by the Export Control Act 1982 (Cth). An export permit is required for the export of live animals and animal reproductive material (sections 2.02, 3.03 and 4.01, Export Control (Animals) Order 2004 ( Cth)). The Export Control (Animals) Order 2004 (Cth) sets out various conditions that must be met in order for an export permit to be granted (these conditions are more onerous for live animal exports than for the export of animal reproductive material).

 
33. Does the law of your jurisdiction allow for patentability of livestock genes on the grounds of isolating and purifying them?

Genes are not expressly excluded from patentability in Australia by the Patents Act 1990 (Cth). However, "human beings and the biological processes for their generation" are excluded from patentability (section 18(2)).

A gene may be patentable if it satisfies the "manner of manufacture" test for patentable subject matter under the Patents Act. In the seminal case of National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252, the High Court held that this requires some human intervention that invents the claimed gene as distinct from merely discovering it. This could involve production of a gene that does not occur naturally or, alternatively, the human intervention involved in isolating and/or purifying a naturally occurring gene.

In D’Arcy v Myriad Genetics Inc [2014] FCAFC 115, an expanded (five judge) bench of the Full Federal Court confirmed the trial judge's decision that isolated human DNA can be patentable on the basis that the steps taken to isolate the gene sequence involve a sufficient degree of human intervention. The same principles would apply to animal DNA. On 13 February 2015, the High Court granted special leave to appeal this decision. A decision on the appeal is expected later this year (see Question 36).

There are two particular issues concerning patents that need to be considered:

  • Novelty and inventiveness. While genes are capable of being subject matter for a patent, to obtain a valid standard patent protecting livestock genes, the requirements for novelty and inventiveness will also need to be satisfied. Given the multi-generational and often slow process of animal breeding, these requirements may present a significant barrier to obtaining patent protection for livestock genes in many cases.

  • Innovation patents. The innovation patent system offers a shorter term of patent protection with a more expeditious application process and a lower threshold of inventiveness compared to a standard patent. Animals, plants and the biological processes for their generation are expressly excluded from eligibility for innovation patents. Accordingly, a genetically modified or cross-bred animal itself would not be able to be the subject of an innovation patent and would be capable of protection only if it satisfied the requirements for a standard patent. However, an animal gene could still potentially be the subject of an innovation patent, because the patentability exclusion does not apply to an invention that is a microbiological process or a product of such a process.

 
34. Which legal instruments are available to protect animal breeding know-how and a resulting animal nucleus?

Patents

It may be possible to obtain a patent protecting new and inventive livestock genes, in which case the patentee will have the exclusive right to "exploit" that genetic material (see Question 33). This extends to the exclusive right to make, hire, sell, import or use the genetic material for whatever purposes it may lawfully be used (including use in breeding).

The extent to which protection extends to future dealing with any subsequent offspring is presently unresolved. If a breeder has a patent over an animal breed (by virtue of holding patents covering the necessary genetic sequences), the patentee potentially has rights in relation to offspring, including offspring produced by cross breeding with animals which do not possess the patented gene. Given the uncertainty in this regard, it would be desirable to deal with future offspring by contract at the time of supplying the patented genetic material or animals possessing those genes.

Confidential information

Know-how that a breeder wishes to keep secret may be capable of protection under the equitable doctrine of breach of confidence. If information about breeding and genetic traits is confidential in nature and communicated only on a confidential basis, an equitable remedy would be available to the breeder against any person who received that confidential information from the breeder (potentially even indirectly) and used it without authorisation for commercial gain. However, there can be significant obstacles to obtaining a remedy for breach of confidence, as the person alleging breach of confidence must adequately define the confidential information and prove on the balance of probabilities that the wrongdoer misused the confidential information.

Steps that breeders could take to protect their position in relation to asserting breach of confidence include keeping good records of breeding information, restricting access to any information that is confidential, and including confidentiality clauses in contracts with anyone with whom they share valuable breeding information. Confidentiality clauses should define clearly what information is protected and restrict both use and future disclosure, potentially giving breeders a cause of action for breach of contract as well as under the equitable doctrine.

Property law

By virtue of ownership of individual animals, the owner has the right to exclude all others from using them and can therefore control the breeding know-how and offspring by controlling access to the individual animals. However, information about genes and breeding lines itself does not constitute physical property and will not be protected under property law.

 
35. Are there legal or practical restrictions on the introduction of new breeds/species, the breeding of certain animal species or certain breeding practices?

Importation is limited nationally by Australia's strict quarantine laws (Quarantine Act 1908 ( Cth)). There are also absolute prohibitions on the importation of certain breeds of dog under the Customs (Prohibited Imports) Regulations 1956 (Cth).

There are regulations in some states of Australia dealing with the artificial breeding (generally including artificial insemination) of livestock. These regulations address issues such as:

  • The premises on which artificial breeding can take place.

  • Who may perform artificial breeding procedures.

  • Control of stock and breeding materials (mainly focused on disease prevention).

  • Inspection and record keeping.

In Queensland, procedures relating to the artificial breeding of stock may be regulated by the Stock Act 1915 (Qld), however there are no regulations in force currently.

In South Australia, there is a licensing regime for people carrying out artificial breeding under the Livestock Act 1997 (SA) and Livestock Regulations 2013 (SA).

In Western Australia, the Artificial Breeding of Stock Act 1965 (WA) has been repealed.

In Tasmania, until 2011 the Animal Farming (Registration) Act 1994 (Tas) regulated the breeding (among other things) of certain "exotic" breeds of sheep, but the regulation is now simply a voluntary code. The Animal Health Act 1995 (Tas) regulates the licensing of people who conduct artificial breeding and where they may do so.

In Victoria, regulations under the Livestock Disease Control Act 1994 (Vic) and the Livestock Disease Control Regulations 2006 (Vic) are not generally applicable; they only apply to livestock declared by the Governor in Council to be regulated. For the relevant livestock or classes of livestock, a licence is required for any premises to be used to collect semen and for artificial breeding courses to be run. Genetic material may only be collected from sires that are approved by the Secretary to the Department of Environment and Primary Industries, and must not be sold if believed to be diseased.

In New South Wales, the owners of some non-indigenous animals must obtain permits to import, keep and/or breed them with other species under the Non-Indigenous Animals Act 1987 (NSW) and the Non-Indigenous Animals Regulations 2012 (NSW).

There are also record-keeping or inspection procedures in South Australia, Tasmania, Western Australia, and Victoria under the above legislative regimes.

 
36. Summarise landmark or recent cases that have defined the law and practice in this sector.

D’Arcy v Myriad Genetics Inc [2014] FCAFC 115

In this case, an expanded (five judge) bench of the Full Federal Court upheld the trial judge's decision that isolated human DNA can be patentable on the basis that the steps taken to isolate the gene sequence involve a sufficient degree of human intervention. In particular, the Full Federal Court held that the isolated DNA had created an artificial state of affairs for economic benefit and therefore satisfied the requirements for patentability as set out previously by the High Court in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 (see below). An appeal to the High Court of Australia (Australia's highest appellate court) is currently pending (see Question 33).

National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252

This is the seminal Australian decision dealing with patentable subject matter. The High Court (Australia's highest appellate court) held that a method of eradicating weeds from crop areas containing a growing crop was a manner of manufacture for the purposes of patentability. The manner of manufacture requirement was held to be satisfied because the claimed invention gave rise to an artificially created state of affairs that had practical utility in the field of economic endeavour.

Ranks Hovis McDougall Ltd's Application (1976) 40 AOJP 3915

In this decision, a pure cultured bacterium was considered patentable, but not the isolated strain of the naturally occurring bacterium. The Commissioner of Patents decided that if the relevant microorganism was naturally occurring, a purified or isolated version would only be patentable if the change were significant enough to constitute a "new microorganism which has improved or altered useful properties" (at [3918]). Simply discovering a naturally occurring microorganism and changing its "morphological characteristics" was held to be insufficient (at [3918]).

Franklin v Giddins [1978] Qd R 72

In this case, a breach of confidence action was successfully brought for the theft of cuttings of a particular variety of nectarine tree by a competitor. The information taken was held to be a trade secret. It was held that the obligation of confidence extends beyond cases where parties are in a contractual relationship which imposes such an obligation. The actions which the claimants had taken to demonstrate the confidentiality of the information that was taken (that is, the genetic structure of the wood) was exercising general surveillance over fruit-pickers and visitors, and advertising the particular variety of nectarines as theirs and only theirs.

 

Agricultural safety and product liability

Standards

37. Summarise the system of food safety standard setting, the main regulator(s) and regulations. If industry input on the standards is possible, indicate how this is conducted.

Food standards are set in Australia by Food Standards Australia New Zealand (FSANZ) (see Questions 26 and 27). Those standards make up the Australia New Zealand Food Standards Code and are divided into four main areas: labelling, composition, food handling and primary production and processing. The labelling and composition standards generally apply in New Zealand as well as Australia. For imported food, the food handling and primary production requirements are not applicable; only the labelling and composition standards apply. The requirements of the Code are a mixture of indigenously developed standards, US CFR requirements and Codex Alimentarius rules.

Although FSANZ is the standards-setting body, it does not have an enforcement function. Enforcement of the Code is the responsibility of the Australian states and territories (and, in the case of imported food, the Department of Agriculture).

 

Liability

38. Set out the legal requirements to establish the liability of producers and suppliers for defective or contaminated food ingredients that cause damage, in relation to:
  • Tort.

  • Product liability.

Liability for damages for defective or contaminated food products by producers and suppliers in Australia arises from a mixture of the common law and various federal and state statutes.

A person who claims to have been injured or who has otherwise suffered loss or damage may commence an action for compensation on the following bases:

  • The common law tort of negligence, which is fault-based.

  • Contract.

  • Breach of provisions of the Federal Australian Consumer Law (ACL). The ACL imposes statutory obligations, including a strict liability regime for defective/unsafe products and statutory warranties/guarantees imposed on manufacturers. Almost identical provisions exist under various state fair trading legislation.

Typically, product liability claims for damage to persons will involve causes of action based on negligence and breaches of various provisions of the ACL. Liability for fault or defect depends on the particular facts and cause of action relied upon.

In addition, there is potential for criminal liability for failing to comply with the Code or selling unsafe food.

Negligence

It is generally accepted that the manufacturer of goods owes a duty of care to the purchaser and user to safeguard them against the foreseeable risks of injury when using the product as intended.

Retailers, importers and distributors are not expected to test or inspect products which the manufacturer delivers in sealed containers which would not normally be opened until they reach the ultimate consumer. However, in these circumstances, the retailer still has a duty to guard against those dangers known to it or which it has reasonable grounds to expect, including by way of warning.

To the extent that any party in the supply chain adds to or modifies a product including packaging and labelling, that party will also owe a common law duty to the purchaser and user in respect of those changes.

Statutory warranties and guarantees

Manufacturers can be directly liable to consumers for (Part 3-2, ACL):

  • Goods which do not correspond with their description.

  • Goods of unacceptable (ACL) quality.

  • Goods which do not conform to sample.

  • Goods unfit for a stated purpose.

  • Non-compliance with express warranties,

These statutory warranties and guarantees are restricted to claims of consumers who have suffered loss or damage as a result of their use or consumption of consumer goods, that is, those that are ordinarily acquired for personal, domestic or household use or consumption. This would include foods.

Manufacturers will be held strictly liable directly to consumers for injury to persons or property damage suffered as a result of a defective product. Goods are considered to be defective if their safety is not such as persons generally are entitled to expect.

The definition of "manufacturer" under these provisions of the ACL is extremely broad and potentially includes anyone in the supply chain. Therefore, anyone in the supply chain could be found liable on a strict liability basis, particularly where a brand or label is applied to the product. However, an importer may not be considered to be a deemed manufacturer solely on the basis of import in circumstances where the manufacturer has a place of business in Australia.

 
39. Which defences are available to the producer and/or supplier to avoid liability? For instance, is market-entry prior government approval a legal defence against product liability and under which conditions?

Negligence

The following defences may be available to a claim in negligence:

  • Volenti non fit injuria (voluntary assumption of risk).

  • Contributory negligence (which in some jurisdictions can be a complete defence).

  • The learned intermediary defence (that is, a manufacturer of a product has fulfilled its duty of care when he provides all of the necessary information to a "learned intermediary" who then interacts with a consumer).

There is no express authority in Australia for a learned intermediary defence, although there is no reason why the defence cannot be accommodated within existing common law principles. Compliance with a statutory/regulatory regime, while evidence of reasonableness of conduct, may not prevent a successful claim in negligence.

Part 3-5 Australian Consumer Law (ACL)

There are a number of specific defences to an action brought that goods are defective or unsafe:

  • The defect alleged did not exist when the goods were supplied by the manufacturer.

  • The goods were defective only because there was compliance with a mandatory standard.

  • The state of scientific or technical knowledge at the time the goods were supplied was not such as to enable the defect to be discovered (the so-called "development risk defence").

  • In the case of the manufacturer of a component used in the product, the defect is attributable to the design of the finished product or to any markings, instructions or warnings given by the manufacturer of the finished product, rather than a defect in the component.

  • If a product is found to be defective or unsafe under the ACL, the manufacturer or supplier can argue what is commonly referred to as the "state of the art defence" or "development risk defence". The manufacturer or supplier must establish that the state of scientific or technical knowledge at the time when the product was supplied by its actual manufacturer was not such as to enable the defect to be discovered.

 
40. Which types of damage are generally compensated by civil courts in food safety liability cases? For instance loss of value, reparation costs, loss of revenue, and personal injury. Are punitive damages available?

Beyond general damages for pain and suffering, compensation can include loss of income, medical expenses, care (including gratuitous care) and economic loss (in certain circumstances). Punitive damages are available but are the exception rather than the norm. All jurisdictions now have caps on the damages available for personal injury.

 
41. Summarise landmark or recent cases that have defined the law and practice in this sector.

Leading Australian cases considering liability for defective agricultural products include: Perre v Apand (1999) 198 CLR 180; Graham Barclay Oyster v Ryan (2002) 211 CLR 540; Regent Holdings v State of Victoria [2013] VSC 601; Dovuro Pty Ltd v Wilkins (2003) 215 CLR 317; McMullin v ICI Australia (1997) 72 FCR 1 (further recent unreported cases include: Colbran v State of Queensland [2008] QSC 132; Marsh v Baxter [2014] WASC 187).

These claims relied on causes of action in negligence, pursuant to statute or a combination of common law and statute. The subject matter of these cases includes:

  • Labelling of weed-infected canola oil seed.

  • Bacterially infested oysters and abalone.

  • Agricultural pesticide for use on cotton.

Damages sought cover personal injury, damage to property and even pure economic loss. Primarily, cases have been run and determined on traditional negligence principals, considering duty, breach, causation and damages.

The criminal provisions for failing to comply with the standards in the Code were recently tested in Tumney v Nutricia Australia Pty Ltd [2008] NSWSC 1382, which concerned labelling and composition of infant formula.

 

Online resources

Foreign Investment Review Board (FIRB)

W www.firb.gov.au/content/default.asp

Main activities. The FIRB is a non-statutory organisation formed in 1976 within the Federal Treasury to provide foreign investment policy advice to the Treasurer and the Australian Federal Government. The FIRB's function is to assess investment proposals submitted by foreign interests and to make recommendations to the Treasurer on the compatibility of those proposals with government policy and the Foreign Acquisitions and Takeovers Act 1975 (Cth). FIRB also provides information on the government's policies to prospective foreign investors and potential investors alike.

The Australian Competition and Consumer Commission (ACCC)

W www.accc.gov.au/

Main activities. The ACCC administers the Competition and Consumer Act 2010. The objectives of the ACCC are to promote competition and provide for consumer protection. It covers anti-competition and unfair market practice, company mergers and acquisitions, product safety and product liability, and third party access to facilities of national significance.

The Australian Seed Federation (ASF)

W www.asf.asn.au/index.php

Main activities. The Australian Seed Federation (ASF) is the peak industry body for the Australian seed industry at the local, state, national and international level.

The Australian Seeds Authority (ASA)

W www.aseeds.net.au/

Main activities. The Australian Seeds Authority (ASA) is responsible for controlling seed certification in Australia, and oversights two certification schemes: the OECD Schemes for the Varietal Certification or the Control of Seed Moving in International Trade, and the Australian Seed Certification Scheme.

Grain Producers Australia (GPA)

W www.grainproducers.com.au

Main activities. Grain Producers Australia (GPA) represents Australia's broadacre, grain, pulse and oilseed producers at the national level. Broadly stated, GPA was created to foster a strong, innovative, profitable, globally competitive and environmentally sustainable grains industry in Australia.

Grain Research and Development Corporation

W www.grdc.com.au

Main activities. The Grains Research and Development Corporation (GRDC) is one of the world’s leading grains research organisations, responsible for planning, investing in and overseeing RD&E to deliver improvements in production, sustainability and profitability across the Australian grains industry.

Cotton Research and Development Corporation (CRDC)

W www.crdc.com.au

Main activities. The Cotton Research and Development Corporation (CRDC) is a statutory authority established in 1990 under the Primary Industries Research and Development Act 1989 (PIRD Act). CRDC was established by the Australian Government to work with industry to invest in research, development and extension (RD&E) for a more profitable, sustainable and dynamic cotton industry.

Rural Industries Research and Development Corporation (RIRDC)

W www.rirdc.gov.au

Main activities. The Rural Industries Research and Development Corporation is a statutory authority established by the Primary Industries Research and Development Act 1989 (PIRD Act). The Corporation was established by the Australian Government to work with industry to invest in research and development for a more profitable, sustainable and dynamic rural sector.

Department of Agriculture, Fisheries and Forestry

W www.agriculture.gov.au/

Main activities. The Department of Agriculture aims to enhance the sustainability, profitability and competitiveness of Australia's agriculture, food, fisheries and forestry industries.

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)

W www.agriculture.gov.au/abares

Main activities. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is a research organisation within the Australian Government Department of Agriculture. ABARES delivers independent economic and scientific research and analysis to a range of stakeholders. ABARES also produce integrated socio-economic and biophysical analysis necessary to address the difficult policy issues facing Australia's primary industries.


Summary: agricultural law in Australia

Agricultural policy

Household farming

Industrial farming

Foreign investment

Encouraged/neutral/restricted?

Encouraged

Encouraged

Encouraged but restricted

Acquisition of a domestic agricultural company

Transaction review

National security review

Competition review

Government approvals?

Foreign Investment Review Board (FIRB) approval (depending on value)

No

Applies depending on transaction

Foreign acquisition of agricultural land

Allowed/not allowed

Transferable

Auction/tender required

Agricultural land ownership?

Allowed

Yes

No

Agricultural land usage rights (maximum term)?

Allowed (no maximum term)

Yes

No

Mortgage/pledge of agricultural land?

Allowed

Yes

No

Agri/green parks

Agri investment

Tax

Land fees

Foreign investment incentives?

No (Australia does not have agri/green parks)

No

No

Foreign investment in crop business

Generally permitted

Restricted

Prohibited

Import of foreign plant varieties?

Quarantine restrictions apply

R&D/test plots?

Restrictions/prohibitions apply in respect of GMO crops in certain state and territories

Production of crop seed?

GMO restrictions apply in certain areas

Commercial crop production?

GMO restrictions apply in certain areas

Distribution of crop seeds?

Voluntary seed certification schemes apply (based on OECD schemes)

IP protection

Available

Certain varieties/species

Not protected

Plant variety right?

Available

Patent on plant genetic sequence?

Yes, subject to novelty and inventiveness

Patent on livestock genes?

Yes, subject to novelty and inventiveness

Exemption breeder rights protected plant variety

R&D for scientific purpose

Prior consent breeder

Royalty payment obligation

Third parties breeding rights?

Yes

No

No

Farmer's privilege

Re-use

Share/exchange

Sell

Farmer rights to harvest protected plant varieties?

Yes

No

No

Genetics

Generally permitted

Restricted

Prohibited

Import of GM seeds?

Approval by the Gene Technology Regulator and the practice may vary in different states or territories.

Import of GM crops?

Approval by the Gene Technology Regulator and the practice may vary in different states or territories.

Testing of GM crops?

Approval by the Gene Technology Regulator and the practice may vary in different states or territories.

Local production of GM seeds?

Approval by the Gene Technology Regulator and the practice may vary in different states or territories.

Local production of GM crops?

Approval by the Gene Technology Regulator and the practice may vary in different states or territories.

Import of animal genetic material?

Discretionary: subject to quarantine restrictions and specific permits based on import risk analysis

Import of new animal breeds?

Discretionary: subject to quarantine restrictions and specific permits based on import risk analysis

Food product liability

Strict liability

Negligence

Market-entry approval is a legal defence?

Producer?

Product liability

Tort

Not generally

Importer?

Product liability

Tort

Not generally

Distributor?

Product liability

Tort

Not generally

 

Contributor profiles

Andrew Hay, Partner and Agribusiness Industry Group Leader

Clayton Utz

T +61 7 3292 7299
F +61 7 3221 9669
E ahay@claytonutz.com
W www.claytonutz.com

Areas of practice. Mergers and acquisitions; foreign investment; corporate governance.

Professional qualifications. Admitted to Practice Queensland, 1992; High Court of Australia, 1992.

Areas of practice. Mergers and acquisitions; foreign investment; corporate governance.


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