What is trade measurement?

Trade measurement is the system that controls the buying or selling of any good or service where the value is determined by a measurement (e.g. weight, volume, number, length, area or quality). Some examples of trade measurement include:

• transactions in which the price of the commodities or goods is based on measurement of quantity or quality;
• agricultural quality measurements;
• pre-measurement of pre-packaged products; and
• measurement for tax purposes (e.g. petrol excise).

The primary purpose of a trade measurement system in Australia is to ensure that the pricing of traded goods is based on accurate measurement. Trade measurement covers both business-to-business and business-to-consumer transactions.

How will my business benefit by complying with the trade measurement system?

Trade measurement is beneficial to businesses in many ways. As a business owner, you will benefit from complying with the trade measurement system because doing so will:

• save you money by reducing the instances where you over-supply product;
• minimize the instances where you under-supply product and therefore decrease your chances of receiving a penalty for non-compliance;
• increase your customers' confidence that your business delivers the quantity and quality that you advertise; and
• increase your confidence that your suppliers are supplying you with the correct quantity and quality of product.

What agency is responsible for trade measurement?

Since 1 July 2010, the National Measurement Institute (NMI) (a federal government agency) took responsibility for trade measurement in Australia from the States and Territories.

The NMI is responsible for developing and maintaining Australia's standards of measurements. The NMI also employs inspectors to monitor compliance with the trade measurement standards.

What are the trade measurement laws? 

In July 2010, new national regulations came into operation that cover the areas of trade measurement:

• the definition of the legal units of measurement;
• the use of measuring instruments for trade;
• testing and verification of measuring instruments for trade;
• transactions by measurement;
• pre-packaged articles; and
• licensing of public weighbridges and instrument verifying businesses.

You can read more about the impact of the regulations on your business on the trade measurement fact sheet.

What does my business have to do in relation to trade measurements?

Regardless of which trade measurement system your business uses, your responsibilities remain the same.

Your measuring instrument must be:

• one that is approved by the NMI for trade use;
• verified for accuracy by a servicing licensee;
• regularly maintained for accuracy;
• kept clean and in good working order;
• verified before use;
• indicating at zero before it is used;
• suitable for its intended purpose;
• used in the correct manner; and
• verified after each repair or meteorological adjustment.

You and your staff must:

• undertake due diligence to ensure your business complies with the trade measurement rules;
• adhere to labeling requirements about measurement marking and packer identification;
• carry out checks to make sure that pre-packaged goods meet the legal requirements for the correct measurement;
• take responsibility for the accuracy of the measurements on packages you import, produce or sell;
• make sure everyone in the business complies with the rules;
• be able to demonstrate that internal quality control systems are in place;
• make sure your suppliers are aware of the trade measurement requirements and comply with them; and
• assist trade measurement inspectors in answering questions and providing advice if requested.

Your business should have:

• systems in place to check that your packing of products comply with measurement requirements;
• policies and procedures in place to ensure correct measurements are being made in your business;
• systems in place to check goods before they are distributed for sale;
• systems in place to achieve compliance with the national trade measurement laws; and
• systems in place to check that goods you are re-selling comply with trade measurement requirements before they are distributed for sale.

What type of compliance system should my business use?

The NMI does not have a compulsory system or set of procedures for ensuring compliance with the trade measurement system for businesses to follow. You are free to choose your own system or procedures for checking your compliance. Some useful things to include in your compliance system include:

• sampling plans that include specified target quantities and control limits;
• packing lines controlled by appropriately set checkweighers;
• the maintenance and checking of measurement equipment;
• the review of the system (which is noted down for your business records); and
• formalised and recorded staff training on the trade measurement system.

Pre-packed articles

When you sell pre-packed articles (e.g. as a manufacturer/ supplier to another business or as a shop to a consumer) then you must comply with three important rules:

1. the declared quantity on a package should accurately reflect the quantity being supplied, so that the average net content of a package in a lot may not be less than the declared quantity;

2. no more than 2.5% of packages in a lot may have negative errors more than the prescribed tolerable negative error (e.g. this means the permitted deficiency that is allowed in a quantity of a pre-packed product); and

3. no package shall have a negative error of more than twice the prescribed tolerable negative error.

The NMI has more information on selling pre-packed articles and the trade measurement system.

Which trade measurement system should my business use?

Businesses are now able to choose which trade measurement system they wish to use. Businesses can voluntarily adopt the Australian Quantity System (AQS) or use a measuring system based on the Uniform Trade Measurement Legislation (UTML).

Read more about the difference between the AQS and the UTML.

What is the AQS?

The Average Quantity System (AQS) tests groups of packages to determine whether they contain their advertised quantities. As an internationally recognized system, the AQS allows Australian businesses to align their measurement practices with those of other countries that follow this system.

• This should make it easier for businesses who regularly trade with overseas businesses.

Using the AQS - what does this mean for my business?

If you choose to use the AQS, your business must still fulfill the obligations mentioned earlier.

You must also mark your pre-packaged goods with the AQS e-mark to let people know that you are using this System. For information on the requirements of the AQS, the test and sampling procedures for NMI Inspectors and the requirements for the AQS e-mark see the NMI website.

The trade measurement compliance program

Inspections

NMI Inspectors can come out to your business as part of a trade measurement compliance inspection program or in response to a consumer complaint or query. Inspectors do not have to give a business notice of their visit and can attend 'at all reasonable hours'.

When inspectors come to your business, you are obliged to assist them by providing relevant information and answering questions.

Offences and penalties

If you incorrectly label or measure packages that you pack or sell, then you may be committing an offence under the trade measurement system.

If your business commits an offence, the NMI may issue you:

• with a warning (verbal or formal written),
• an inspection report (which lists the remedial action that you need to take),
• an infringement notice, or
• seek enforceable undertakings.

The NMI may also choose to proceed with legal action against your business through prosecution or by seeking an injunction.

What's next....

The NMI provides factsheets and information relevant to businesses trading in:

• precious stones and metals;
• petrol, diesel and LPG;
• garden landscape materials;
• alcohol;
• meat and seafood;
• bread and bakery products;
• fruit and vegetables;
• firewood; and
• market stall holders and roadside traders

For more information on your specific trade measurement questions, you can contact the Western Australian Office of the NMI on 9368 8400, email or see the NMI contact page for a specific contact.