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Tuesday June 28, 2011

Truth behind Aussie’s new bill on palm oil labelling

Commodities Talk- by Hanim Adnan


JUST two weeks ago, the local palm oil fraternity was ecstatic over the news of Malaysia winning a case against the proposed Food Standards Amendment (Truth in Labelling Palm Oil) Bill 2010 in Australia.

The then Australian senate community affairs legislation committee had decided not to pass the bill after a team led by Malaysian Palm Oil Council (MPOC) chief executive officer Tan Sri Dr Yusof Basiron put up a strong case before a public hearing of the committee at Canberra in April.

However, it proved to be a short-lived victory.

Last Thursday, the Australian Senate made a decision to pass the bill that will require palm oil to be labelled in all Australian food, thus making it one step closer to becoming a law there.

This turn of event had caused an uproar among the local palm oil sector, leading to Plantation Industries and Commodities Minister Tan Sri Bernard Dompok's terse statement, expressing grave concerns over the Aussie senate's lack of attention on the palm oil industry in Malaysia and its sustainable practices.

The bill, mooted by independent senator Nick Xenophon, was believed to have secured the support of the Australian opposition party.

The passing of the bill was highly speculated as a “pre-arranged deal” or “trade-off arrangement”, as Australian independent senators had threatened not to support the impending important Aussie government's proposed carbon tax bill unless the palm oil labelling bill is approved.

Even Tan Sri Dr Yusof Basiron had deemed that bill as a “disingenious piece of legislation: it is bad and highly discriminatory”.

What about coconut and palm kernel oils, which were also produced and exported from tropical countries (and used in food and confectioneries) that were not required to be labelled separately like palm oil?

It was clearly against the provisions of World Trade Organisation that prohibit discriminatory treatment of similar competing products.

The bill also implied that palm oil produced from legitimate agricultural land that was once forest has to be separately labelled.

Logically, countries importing Australian agricultural products, such as beef and lamb produced from agricultural land that was once forest and home to the cuddly Koala bears, must also insist for such products to be labelled separately.

Yusof reiterated that “if each country were to propose and approve legislations restricting imports of other countries' produce based on the wimps and fancies of the green NGOs, there wil soon be zero trade between countries.”

Interestingly, in the land down under itself, the bill on palm oil labelling has come under heavy criticism.

The Australian Food and Grocery Council (AFGC) said the bill would have significant impact on Australia's food manufacturers and compromise the country's food labelling system.

The cost of changing a single label will be A$10,000 to A$19,000 per product!

As it is, the food and grocery manufacturers, which employed 288,000 Australians, were already facing intense pressure from rising input expenses such as energy, wages and water; higher transport costs; record-high global commodity prices; and supermarkets forcing down retail prices which is seriously impacting margins.

The AFGC claims that when it suits them, the opposition party was happy to do backroom political deals that will have a similar effect on industry as a carbon tax increase costs and put more pressure on jobs.

Therefore, what will be the next cause of action by Malaysia and even the AFGC to stop the new bill?

  • Deputy news editor Hanim Adnan wonders whether Malaysia will seriously take up the Aussie's palm oil labelling to the WTO, something similar with its continuous battle with the EU's Renewable Energy Directive issue.

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