Explanatory Memorandum to COM(2023)98 - Amendment of Regulation (EU) 2019/1009 as regards the digital labelling of EU fertilising products - Main contents
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| dossier | COM(2023)98 - Amendment of Regulation (EU) 2019/1009 as regards the digital labelling of EU fertilising products. |
|---|---|
| source | COM(2023)98  |
| date | 27-02-2023 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
In 2019, the European Parliament and the Council adopted Regulation (EU) 2019/1009 laying down rules on the making available on the market of EU fertilising products 1 . This Regulation replaces the harmonisation rules on EC fertilisers, as laid down in Regulation (EC) No 2003/2003 2 .
Regulation (EU) 2019/1009 introduces labelling requirements that are much more extensive than Regulation (EC) 2003/2003. This reflected new social demands and concerns, as well as the fact that the new rules drastically opened the EU market for products that are innovative and unknown, and therefore require better user information. However, overloaded labels cause two problems: they are both difficult to read by interested persons and difficult to manage for economic operators. Providing a lot of details on a label makes it difficult to identify the essential information and may also need frequent updates, thereby increasing the labelling costs.
This proposal is governed by the same general objectives as Regulation (EU) 2019/1009, namely ensure a high level of protection for human health and the environment and the well-functioning of the internal market. In response to the two problems identified, this proposal follows two specific objectives: improving the readability of labels and facilitating their management by economic operators.
• Consistency with existing rules in the policy area
Fertilising products are part of the food chain and account for a significant portion of the price of agricultural products. In the 2021 Communication on energy prices 3 , the Commission acknowledged the economic difficulties faced by the energy-intensive fertiliser industry following the dramatic increase in energy prices as of the autumn of 2021. As explained in the 2022 Communication on food security 4 , the war of aggression of Russia against Ukraine exacerbated the economic difficulties already faced by the industry.
The current difficult political and economic context speaks in favour of, firstly, accelerating the existing trend of improving the use efficiency of fertilising products and, secondly, streamlining the costs of bringing fertilising products to the market. This proposal supports both trends in the fertilising products policy.
On the first issue, the more efficient use of, in particular, fertilisers is an important element in the Farm to Fork Strategy 5 , which specifies a target of 50% reduction of nutrient losses and aims to reduce fertiliser use by 20% by 2030. The need to increase the use efficiency is reiterated in the 2022 Communication on fertilisers 6 . Use of digital tools is a key enabler in this process, for example in tracking the Gross Nutrient Balance baselines and targets for countries and the collection of data at regional level. In addition, a better communication of product properties by using digital labels is a step towards optimising instructions for use efficiency based on those properties, which will lead to a better communication of the use instructions and avoid over-fertilisation.
On the second issue, laying down rules for the voluntary digitisation of labels will lead to cost reductions for economic operators in the medium and long term. It will further streamline the labelling process, by avoiding unnecessary costs and reducing packaging waste. This will optimise the conditions for bringing fertilisers to the EU market in challenging times.
This proposal feeds into the broader digitalisation process of the agricultural sector, a priority for most Member State who signed a declaration for ‘a smart and sustainable digital future for European agriculture and rural areas’ on 9 April 2019 7 .
• Consistency with other EU policies
In the Green Deal 8 , the Commission announced its intention to address the twin challenge of the green and digital transitions. Soon after, the COVID-19 pandemic radically changed the role and perception of digitalisation in our societies and economies and accelerated its pace.
The 2021 Digital Compass Communication 9 maps out a clear path towards a common vision and actions for Europe to succeed in the Digital Decade. It puts forward the ’digital by default’ principle and outlines a way ahead for the broad-based digitalisation of society.
There is also a general trend towards digitisation of labels and documents accompanying products. Rules are in place for construction products 10 and medical devices 11 or under preparation for batteries 12 , detergents 13 , cosmetics 14 and hazardous chemicals 15 .
The proposal for a Regulation on Ecodesign for Sustainable Products 16 aims to establish a Digital Product Passport (DPP). In the version proposed by the Commission, the passport will introduce the mandatory adoption of digital ways of communicating information about all regulated products, including fertilising products. Such information will not cover labelling requirements. Therefore, this proposal complements the measures already proposed for digitising other information about products.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
This proposal has the same legal base as Regulation (EU) 2019/1009: Article 114 of the Treaty on the functioning of the European Union on the approximation of national rules for the establishment and functioning of the internal market. Although the Commission is empowered to amend the Annexes to Regulation (EU) 2019/1009, all the amendments proposed in this initiative are included in this proposal in order to ease the adoption process as they are linked to each other.
• Subsidiarity
The problems caused by overloaded labels of EU fertilising products have a strong cross-border dimension. Inorganic fertilisers subject to Regulation (EC) 2003/2003 are produced in a few EU Member States 17 and sold all over the EU. Regulation (EU) 2019/1009 aims both to maintain these products within its scope and encompass new products, which have not yet been covered by harmonisation rules, thus increasing their potential on the EU market.
The extensive labelling requirements laid down in Annex III to Regulation (EU) 2019/1009 have to be provided on the physical label. Part of the information required by this Annex is subject to frequent changes and, in accordance with the same Regulation, labels of certain products have to change before reaching the end-users (for instance, the label of a fertilising product blend will contain all the relevant information about the component EU fertilising products expressed in relation to the final blend; so, before the blend reached the end-user, both the component EU fertilising products and the blend itself had a physical label). The Regulation is directly applicable in all Member States. In addition, Member States have the obligation not to impede the free movement of EU fertilising products for reasons linked to their labelling. Therefore, Member States cannot adopt national measures to improve the readability of physical labels or avoid frequent changes to them.
Member States could adopt national rules regarding minimum standards for digitising the labels, when used on a voluntary basis and in addition to physical labels, given that this issue is not yet covered in Regulation (EU) 2019/1009. Such an approach would unavoidably lead to different practices all over the EU and create obstacles in the functioning of the internal market. It could lead to inequalities in terms of potential cost savings and communication of information. It would also increase costs for industry to adapt to divergent digital labelling requirements in different Member States.
By contrast, introducing the conditions for the digital label at EU level has the added value of harmonising the various practices. By creating a level playing field, such an initiative would improve the functioning of the internal market, while ensuring the high standard of protection required by Regulation (EU) 2019/1009. In addition, the decision on which labelling elements currently required on the physical label may be provided only digitally can be made only at EU level.
The benefit of EU action also lies in the existence of potential economies of scale in the fertilising products industry. Aligning digital labelling requirements across the EU could facilitate the use of multi-lingual labels and thus support the distribution of products with the same label in more than one Member State.
Therefore, this proposal on the voluntary digitisation of labels for EU fertilising products is necessary and can efficiently tackle the problems identified.
• Proportionality
The initiative does not go beyond what is necessary to achieve the objectives sought. It aims to introduce voluntary digital labelling for EU fertilising products. Economic operators will have the choice of whether to provide the labelling elements on a physical or digital label.
If a digital label is provided, this proposal lays down general rules to ensure a high level of protection for users of EU fertilising products.
In the accompanying impact assessment, policy options with various degrees of digitisation have been assessed. The option put forward in this proposal strikes the best balance between the interests of various stakeholders. While it opens the possibility of providing digital labels, it maintains on the physical label of EU fertilising products made available to end-users the most important information, in response to the readiness of such end-users to rely only on digital tools for having access to information. Following the evolution of the society, the number of labelling elements to be provided only digitally could be further increased, which is accounted for in the empowerment laid down in this proposal.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Stakeholder consultations
The following consultation activities have been carried out:
Contents
The open public consultation confirmed the interest in digital labels both from the industry and the users’ side.
Over half of respondents (52.1%, N=198) would respond positively or moderately positively if some information was removed from the label and could only be obtained digitally. Since 22.7% did not know/could not answer, the percentage is higher (66.9%) among those that answered.
Most respondents (N=93, 72%) would implement digital labelling if it was possible.
The main benefits of a digital label (N=195) include: the possibility to provide more detailed information (14%), being able to provide all the relevant information where the packaging is too small (14%), easy access to information (13%), access to up-to-date information (13%) and information in additional languages (13%); more relevant/targeted information, environmental benefits (19%) and cost savings (8%).
The main challenges of digital labels (N=200) include: difficulty to access information (24%), differences between on-pack and digital information (22%), inequalities for different population groups (22%), and increased costs for industry.
Interviews have been organised to collect information on, in particular, (i) what constitutes essential labelling information for various categories of stakeholders, (ii) labels’ use patterns, (iii) the benefits and disadvantages of digital labelling and (iv) industry labelling practices. The large number of interviews with industry stakeholders and fertilising product users revealed that input from these groups in relation to specific labelling information (e.g. content of nitrogen) was often divergent, varying according to the Product Function Categories and the types of users in question. Thus, essential information for industry representatives was not the same as for professional and non-professional users.
This proposal takes into account these divergent needs, and gives priority to ensuring the safe use of EU fertilising products and a high level of protection of human health and the environment, by keeping on the physical label of packaged products sold to end-users the most important information.
The survey targeted users of fertilising products (professional and non-professional), the industry (manufacturers, importers and distributors) as well as conformity assessment bodies and market surveillance authorities from France, Germany, Italy, Lithuania, Poland, Romania, Denmark, and Spain.
Out of the 755 responses received, non-professional users (i.e. hobby gardeners, persons acting outside the scope of an economic activity) constituted the largest response group (43.6%), followed by professional users (33.5%).
The targeted survey also revealed the differences in perception as regards the most important information on the label. While users considered information about safety requirements absolutely essential, for manufacturers what was thought to be essential was agronomic efficiency.
When asked which format they prefer to access label information in, most of the professional and non-professional users selected physical labels. This confirms the need to keep the most important information on the physical label.
Manufacturers had divergent views on whether digitalisation in general would save them money. 48.4% think that it would provide financial savings (N=49).
Eight focus groups were organised with professional and non-professional users from France, Poland, Romania and Spain. Participants welcomed the digitisation of the EU fertilising products labels, which was seen as beneficial and a natural transition. Concerns were expressed about accentuating the negative effects of the digital divide.
This consultation activity showed the differences in perception between professional and non-professional users as regards the importance of various categories of information. Agronomic efficiency information (such as content of nutrients) was considered more important than other types of information by professional users, while after purchase information, such as use instructions or storing conditions, was not that important as ‘everybody knew what to do’. Non-professional users, on the contrary, found agronomic efficiency information too technical and thought that after purchase information was more important. Similarly, professional users were more interested in information on content, such as the list of ingredients, than non-professional users.
The survey experiment explored the effects of labelling changes on key behaviours among professional and non-professional users of fertilising products. The exercise sought to understand the behaviours users actually exhibit when shown digitised labels, instead of asking participants what they think about digitisation.
The survey experiment showed that professional users are mostly unaffected by changes in the amount of information on the physical label when it comes to product application and storage. Non-professional users are more sensitive to label simplification than their professional counterparts.
With regards to factors influencing understanding of labels, the ease of interpreting labels (self-reported) is significantly positively related to the age of professional and non-professional users, as well as to their experience of using the fertilising product in question. Less information on labels did not lead to a significant change in how easily information was interpreted on the label in question by either of the two user groups.
The unmoderated usability testing exercise tested the popularity and potential use of various digital technologies that could be implemented on the fertilising product labels. Of the 48 tested individuals, 33 scanned a QR code and 26 accessed a URL, making these the most used options.
An on-line meeting of the Commission Expert Group on Fertilising Products took place on 15 March 2022. The input received from the Members and Observers in the expert group fed into the development of the policy options. The expert group welcomed the categorisation of the information and the methodology used for building the various policy options.
They expressed divergent views on the need to introduce a distinction between non-professional and professional users. While some pointed to the fact that the two categories of users have different behaviours and different needs in terms of labelling, others drew the attention to the increased complexity such a distinction would add to the rules, and to the difficulties in implementing and market surveillance.
Following the expert group meeting, an online survey to collect data on costs and benefits related to various options for digitisation was conducted. The survey had 93 valid responses distributed among various stakeholder groups.
Some 56.3% of respondents (manufacturers, N=32) indicated that they already provide some labelling information digitally. Overall, there was strong support for the proposed general rules for digitisation of labels (N=84). When comparing the effects of labels under the different options on economic, environmental and social impacts, the general response was that the higher the level of digitisation, the greater the positive impacts.
• Collection and use of expertise
In analysing the results of the consultation activities and the impact of various policy options, the Commission used an external contractor.
• Impact assessment
In performing the impact assessment 18 , the Commission faced two difficulties. Regulation (EU) 2019/1009 is applicable as of 16 July 2022, so no concrete experience in applying the new rules was available. In addition, the Regulation lays down the optional harmonisation of EU fertilising products. The choice if to apply the Regulation or not is with the manufacturers of the fertilising products. Therefore, it is difficult to estimate how many manufacturers will make such a choice and will maintain it in the coming years.
The impact assessment received a positive opinion from the Regulatory Scrutiny Board on 22 July 2022 19 .
The Commission assessed the impacts of three policy options (PO): PO1 - development of a guidance document only, PO2 - information may be provided digitally for EU fertilising products and PO3 - all information is provided digitally for certain categories of products.
As regards PO2, 5 sub-options have been considered (PO2a-PO2e). The level of digitisation varies (ranging from certain information to be provided on the digital label to most of the information to be provided there). In some of the sub-options, a distinction is made between professional and non-professional users. The impacts of PO2a-PO2e are analysed together, as only limited differences have been identified.
The preferred option is PO2a combined with PO3:
–PO2a means the optional digitisation of certain information of the label of EU fertilising products, without making a distinction between professional/non-professional users;
–PO3 means the optional digitisation of all the information for products sold in bulk and products not sold to end-users, but to other economic operators.
While PO2a is the most cautious in terms of the scope of the information to be provided only digitally, combining this option with PO3 ensures the objectives are most effectively addressed, keeping a balanced approach to the different views of stakeholders.
Firstly, option 2a implies keeping all the safety related information, as well as the most important information on agronomic efficiency, content and information relevant after purchase on the physical label. By reducing the other type of information to be included on the physical label, safety information will become more visible thus contributing to the objective of protecting the health and the environment. This option takes most into account the digital divide. Removing all label information, including safety information, under option 3 for sales to economic operators is justified by the particular users concerned, which are not end-users. The economic operators buy the products to make them available on the market, and not to apply them on soils. As regards bulk products, given the nature of the product itself, there is no possibility of providing the information on a physical label affixed to the packaging, which is the direct way of communicating labelling information. Replacing the leaflet with a digital label is not expected to have a significant impact on the availability of the information.
Secondly, this combined option will reduce labelling costs and will create a level playing field between economic operators as regards the use of digital labelling. The labelling costs will be reduced both by including more languages on the physical label and by avoiding frequent changes to it.
Lastly, this combined option is easier to apply and enforce, as no distinction is made between professional and non-professional users. Such a distinction does not exist in Regulation (EU) 2019/1009 and would have increased the complexity to the rules and made their implementation more difficult.
Given the limited evidence base for the costs, a full extrapolation of costs to EU level is problematic and risks providing a false picture. Maximum EU-level costs for enterprises under PO2 (but also PO3) based on stakeholder survey data would be €0.3m (ranging from €0.1m to €0.6m) for one-off costs, and €0.1m (ranging from €0.06m to €0.4m) for ongoing (annual) costs. In practice, the actual costs would most likely be less than these maximum costs, as a certain proportion of firms would choose not to provide digital labelling.
It should be noted that some costs may additionally be incurred by the economic operator opting for digital labelling, in terms of providing the information by alternative means where necessary. Although such costs could not be quantified, they are expected to be marginal, given that product information would only be supplied to small portions of the target markets. In the longer term, costs would be offset by savings related to updating physical labels, avoiding double labelling and freeing space on the physical label for information in more languages. In addition, PO3 leads to net benefits estimated at 0.8m as it introduces full digitisation of the labelling requirements for products sold in bulk or products which are not sold to end-users.
In terms of direct impacts of PO2a and PO3 on public authorities, despite positive aspects related to the ease of managing and compiling online data, public authorities could require some investment in equipment and training to facilitate access to digital labels.
The estimates for preferred policy option 2a suggest that a mid-range possible one-off net benefits would be negative accruing to all enterprises in EU27 (i.e. €-0.1m, based on the assumption that all enterprises that export would gain from savings associated with reduced physical labelling requirements). Annual maximum recurring benefits for PO2a would be €0.9m accruing to all enterprises (EU27). Under option 3, maximum possible one-off net benefits would also be negative (i.e. €-0.5m based on the same assumptions as for PO2a). 20 However, annual maximum recurring net benefits for PO3 would be €3m accruing to all enterprises 21 (EU27).
The preferred option is expected to have environmental benefits, by reducing packaging waste. Such benefits could not be quantified.
No negative social impact is expected as under PO2a, the information found essential by various categories of users is maintained on the physical label. On the contrary, the readability of the physical label is expected to be improved, by moving various technical details to the digital label. In addition, users will be able to take full advantage of the various possibilities created by digitalisation in terms of accessibility and searching specific information in digital format.
• Regulatory fitness and simplification
This proposal aims to simplify the compliance with the labelling requirements under Regulation (EU) 2019/1009 and thus to reduce the burden on economic operators, without jeopardising the main objectives of the Regulation, including the protection of human health and the environment.
This proposal directly contributes to the REFIT scoreboard (Areas 13. Chemicals legislation (other than REACH)), by using digital tools to communicate information on EU fertilising products. Reaping the benefits of the digital age will result in potential burden reduction for SMEs, improved enforcement and compliance, reinforcing cooperation between competent authorities, including customs and market surveillance authorities.
The digitisation of the label remains optional. So, no specific measures are needed for small and medium enterprises, which are free to choose the right moment to do this change, if at all.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
In the evaluation performed in accordance with Article 49 of Regulation (EU) 2019/1009, the Commission will also assess how this specific intervention has performed (or is working), and draw preliminary conclusions. This will be the first opportunity to assess whether there were unintended or unexpected effects.
Subsequently, the Commission will be monitoring if the EU intervention remains fit for its purpose, should be adjusted for greater effectiveness, relevance and coherence, or should simply be repealed.
• Detailed explanation of the specific provisions of the proposal
This proposal introduces the voluntary digitisation of the labels of EU fertilising products. The choice is with the manufacturers, importers or distributors of EU fertilising products.
It is proposed to allow economic operators to provide all the labelling elements required under Annex III to Regulation (EU) 2019/1009 only in a digital format in the following two situations: the EU fertilising products are sold without a packaging, or the EU fertilising products are sold to economic operators (which are not end-users of the products).
The economic operators opting for the digital labelling of EU fertilising products supplied to end-users in packaging will have to provide also a physical label, containing the most important information. The physical label will contain all the information concerning the protection of human health and the environment, as well as the most important information on the agronomic efficiency and content of the product, or information used after purchase.
Once economic operators choose to provide digital labels, the proposal lays down the general rules regarding the digitisation of labels. In particular, the economic operators will have to ensure that the digital label can be accessed free of charge and is easily accessible all over the EU, and they will have to take into account the needs of vulnerable population groups. The information on digital labels is also to be provided by alternative means, where needed.
The proposal contains a Commission empowerment to supplement the general digital labelling requirements and further adapt Annex III by deciding which labelling elements could be provided digitally when EU fertilising products are made available to end-users in packaging, depending on the evolution of the society.