This memo was commissioned to analyse and evaluate the effects of the Peru Junk Food Act on our company. It mainly seeks to scrutinize and delve into the ethical considerations surrounding the adopted junk food law and the consequences our company may have to endure following its enactment.
The regulation, which received presidential assent in May, 2013, aims at achieving healthy nutrition among Peruvian children and adolescents and impedes the advertising of junk food in the country. The legislation distinctively targets children and youth aged sixteen and below (Peruvian Times, 2013). Research shows that the Peruvian Government also seeks to limit the amount of trans-fat in industrial foods and therefore mandates compulsory health warnings on products that exceed specific skirts of sugar.
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The ethical considerations of this law is to promote healthy eating among the Peruvians most specifically among the youth and children, and curbing obesity which is a widely spreading epidemic not only in Peru but also in the world at large. It also seeks to control the global burden of non-communicable diseases such as chronic respiratory diseases and cardiovascular associated with unhealthy diet, laziness or rather physical dormancy, consumption of alcohol and tobacco (Neumann, 2014). In addition, the law aims at dissemination of information to consumers regarding nutrition and healthy eating.
The law has faced a number of criticisms from various industry groups, business leaders, media and even nutritionists. Some local media groups in Peru mention that this legislation is unfairly targeting businesses, not only the American fast food restaurants in the country but also the local Peruvian restaurants that serve French fries and other greasy foods. Leaders in the nutrition industry claim that restricting advertisements of fast foods will not assist in curbing obesity as it is so believed. A local newspaper, El Comercio, alluded that the law is so broad that it will impede the advertising of all foods considered unhealthy altogether (Peruvian Times, 2013). Not to mention another media source also acknowledged that the restriction on advertising and sale of fast foods in schools is futile since if people want to eat greasy and flavoured food then they will do so even if it is in the luxury of their homes (Peruvian Times, 2013). Other critics claim that people eat junk food knowing that these foods are unhealthy and simply because they are cheaper than healthy foods. Thus consumption will not be impeded by a ban on the advertisement of such foods. Moreover, introduction of healthy foods in food canteens at school does not necessarily mean that parents will provide the same healthy foods when the children are at home (Balcazar, 2015). The law should extend to provide affordable healthy foods to the poor population.
The law has however, had a heavy impact on our company, it being a food company. There is a massive loss of revenue following a large drop in the company sales of processed foods. The high taxes charged on industrial foods have resulted in reduced production activities thereby reducing output and eventually reducing sales. The thwarting of advertisement has led to a reduced market base for the company and this does not hold the profits of the company in good stead.
It is recommended that the company establish a code of conduct by which it would regulate itself by rather than the regulation be done by the government. We could also make changes in our production activities and menu in order to include healthier food options and reducing calories, sugar and salt in our products. The government should also subsidize food companies in order to ensure their continued existence in the foreseeable future.
It is universally perceived that the world is now in the interim of a globalized obesity epidemic with the number of obese youth and adults rising at a fast rate with every passing day. Contrary to what was believed initially, obesity is no longer a first world problem or no longer affects only those with high incomes but also those in third world countries and those accruing low incomes (Taylor, Parento & Schmidt, 2014). With the ever busy schedules and fast-paced activities of the world today, most individuals have taken to fast food meals preferring that to home-cooked meals in the name of saving time. In addition, children are introduced to unhealthy eating habits much earlier in their lives as parents opt to serve them with fast food meals and sugar treats as opposed to healthy balanced diet. Rampant advertisement of these processed foods to children and youth has also served much to increase consumption of junk food. This has served to increase global obesity by 82% over the past decades with regions such as the Middle East seeing even higher rates (Taylor, Parento & Schmidt, 2014). The dramatic rise in obesity rates is having such a massive and significant impact on universal health trends, placing people throughout the world today at a greater risk of suffering from a range of non-communicable diseases such as heart disease, type II diabetes and cancer, among others (Taylor, Parento & Schmidt, 2014).
According to the latest national household survey data shown, child obesity in Peru has increased from 4.2% to 16.8% in the past two decades exceeding the global average trend. Research papers indicate that 19.5% of children population under 5 are affected by under-nutrition, while 26% of the Peruvian population is overweight and 11% obese. In a bid to control this issue that has risen to such prominence, the Peruvian government passed a law that intends to prohibit advertisements and sales of unhealthy foods in schools and place a ban on advertisements of such processed foods on the television and radio during family hours, that is, 6am to 10pm . Moreover, a carte blanche was passed that requires such foods to carry warning labels indicating whether they are saturated in sugar, salt or trans-fat and that consumption may lead to chronic lifestyle diseases such as diabetes and cardiovascular diseases (Fraser, 2013).
In addition to curbing the advertisement of junk foods in schools and on the media, the Peruvian Junk Food Act aims at providing nutrition education to children in schools (Sowetan Live, 2013). This way, children and youth understand the minimal nutritional value of junk foods and coerce them into consuming healthier food options. Moreover, schools are advised to increase the physical activities the students engage in so that they are able to maintain an active metabolism which then curbs the rise in obesity and overweight cases among children (Fraser. 2013). This way children are therefore trained to lead a healthy lifestyle right from an early age (Mora, 2016). As Luis Fernando Leanes, head of Pan American Health Organisation office in Peru, mentioned, “Being able to decrease children’s exposure to these foods will mean more hospital beds free in the future to care for people with other illnesses.” (Fraser, 2013).
In spite of the ethical considerations made by the government, this legislation is bound to have adverse effect on company sales and profits. Our company being a food company, is bound to lose revenue due to the reduced amounts of sales of industrial food. This is because schools that were initially purchasing our products are compelled into breaking off purchase as the law prohibits sale of such products in schools. Hence, the company no longer earns income it used to earn from these schools before enactment of the law. Moreover, the high taxes charged on processed food limits the production activities of the company since this leads to an increase in production costs. Consequently, the company then produces less output and therefore revenue is reduced. Curbing of advertisements of industrial foods also lead to a massive reduction in the company’s market base because information on the company’s products now reaches fewer people. The limited product promotion then results into limited sales and eventually limited profits as very few prospective customers are attracted to the company.
Following the effects of the regulations on the company, a number of recommendations have been suggested:
Strategic Ethical Recommendations
We should make changes to the company’s production activities and menu by introducing healthier food options and ingredients to our products in order to increase sales. As well as introducing new food options, we could also cut on the calories, trans-fat, sugar and salt levels in the existing products in order to increase their nutritional value (Fraser, 2013). This is bound to make more sales following the main goal of the law which is to achieve healthy eating habits.
The company should also push for an amendment of the law by suggesting a code of conduct by which industrial food companies should operate by rather than being regulated by the government. This code of conduct will establish a balance for the companies whereby they can maximise profits while at the same time processing foods that provide healthier options for the Peruvian citizens.
Upon the introduction of healthier options in the company’s products, the company should also push for subsidies by the government and a reduction in taxes in order to increase production activities and incidentally increase output. The increased output ensures that the company maintains sales and is able to maximise its profits. This then ensures that the company continues operations in the foreseeable future rather than dissolve due to the high taxation.
In conclusion, regardless of the criticisms and the effects of the law on industry, both the government and food companies should work hand in hand ensure that the Peruvian citizens maintain a healthy diet and proper nutrition in order to avoid the burden of lifestyle diseases that accompanies unhealthy dietary habits. As President Ollanta Humala said according to state news agency Andina, upon signing of the law, “We want to create a pact to defend the good nutrition of our children, to defend healthy practices in order to have healthy as well as strong children, capable of succeeding at school and ready to take on new challenges in society.” (Peruvian Times, 2013).
Balcazar, R.N. (2015). Regulation is not the same as prohibition: The major challenge of regulating the food industry in Peru . Law on Promotion of Healthy Eating .
Fraser, B. (2013). Latin American Countries crack down on junk food . The Lancet. Vol 382, (p 385-386). Retrieved from http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(13)61657-8/fulltext?rss=yes
Mora, R. (2016). Peruvians protest failure to implement anti-junk food law. Telesur TV. Retrieved from http://www.telesurtv.net/english/news/Peruvians-Protest-Failure-to-Implement-Anti-Junk-Food-Law-20160518-0047.html
Neumann, G.B. (2014). Sugar is the new tobacco: The Peruvian junk food law in light of the WTO law after seals dispute . The Fourth Biennial Global Conference Proceedings, July 10-12, 2014, University of Bern (Working Paper No. 2014-23). Society of International Economic Law.
Peruvian Times. (2013). President Humala Signs Law to Curb Advertising of Junk Food. Retrieved from http://www.peruviantimes.com/17/president-humala-signs-law-to-curb-advertising-of-junk-food/19183/
Sowetan Live. (2013). Peru cracks down on junk food in schools . . Retrieved from http://www.sowetanlive.co.za/news/world/2013/05/17/peru-cracks-down-on-junk-food-in-school
Taylor, A. L., Parento, E. W., & Schmidt, L. A. (2014). The Increasing Weight of Regulations: Countries Combat the Global Obesity Epidemic. Georgetown University Law Centre. Retrieved from http://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=2338&context=facpub