French Senate passes ‘Nutella Tax’

THE French Senate yesterday approved a 400 per cent tax hike on palm oil shipped into France. This will undermine Malaysia and Indonesia’s oil palm industry that currently generates employment for some five million farmers.

Initiated by French Senator Yves Daudigny, the tax on palm oil will be raised to euro400 (RM1,556) a tonne from the current euro100.

It is code-named “Nutella Tax” because palm oil is a popular ingredient in Europe’s favourite chocolate hazelnut spread called Nutella. Following the tax, there will be a six euro cent hike on per kg of Nutella, commonly used in restaurants and creperies across France.

The tax hike on palm oil is based on claims alleging that the food ingredient is bad for health because it contains high levels of saturated fats; and the oil palm industry is causing wanton deforestation. 

It was reported that French Senators will have another chance to vote on the amendment and it will still need to be considered by the lower house, the National Assembly.

Malaysian Palm Oil Council chief executive officer Tan Sri Dr Yusof Basiron highlighted that both of the claims are false and recycled from the US anti-palm oil campaign which proved to have no scientific justification. 

“This French campaign is, at best, 20 years outdated,” he told Business Times in an interview.

First of all, palm oil’s saturated fat content should be analysed in relation to the total fats consumed by the French people.

“The majority of saturated fats consumed in France comes from animal sources — from meat, milk, cheese and butter — not from palm oil,” he said.

The French consume about 101kg of meat per person per year with an average of 15kg of saturated fat content. 

Milk consumption per person is 92.2 litres, containing 4kg of milk fats which belong to the saturated fats category. Cheese has 30 per cent animal fat content and the French are well known to consume 24kg of cheese per capita, which works out to be 8kg of saturated animal fats. Butter consumption is 7.3kg per capita which is 100 per cent saturated animal fats. 

“If we were to add these up, the total animal saturated fats from milk, meat, cheese, and butter per person per year is 34.4kg. In comparison, palm oil consumption per capita in France is only 2kg,” Yusof concluded.

In rebuking allegations that oil palm planters in tropical countries cause rampant deforestation, he noted Malaysian farmers’ track record in efficient land use and conservation. 

“Do you know that more than half of Malaysia’s landmass is still under forest cover? Only a quarter of total land area is designated for agriculture. In contrast, forest area in France covers just 28 per cent of total land area while agricultural land takes up more than 50 per cent of the country. 

The oil palm tree yields 4.13 tonnes of vegetable oil per hectare, or 10, seven and five times the yields of soyabean, sunflower and rapeseed, respectively. At the same time, oil palms occupy less than five per cent of the world’s land under oil crop cultivation.

Yusof adduced more studies from reputable science journals detailing oil palm trees are actually the most environmentally- friendly among all oil crops. This is because on a per-litre basis, palm oil production requires less energy, land and fewer fertilisers or pesticide usage compared to other vegetable oils.

Oil palms have a productive lifespan of 20 to 30 years while its competitors like rapeseed, soya and sunflower need to be uprooted every four months during harvest and that contributes to soil erosion.

More importantly, a recent study from Fonds Francais Alimentation et Santé finds that replacing palm oil with partially-hydrogenated soft oils is a bad option for French consumers as it would potentially lead to a rise in the level of trans fat consumption.

Yusof concluded the Nutella Tax is irresponsible, ill-informed and ignores the primary source of saturated fats in the French diet.

“We urge the French government to reject the Nutella Tax. The right thing to do is to inform the French public of the truth about palm oil nutrition. Oil palm trees are not genetically-modified and that the oil from the fruits is free of dangerous trans fats and contains valuable vitamins,” he said. 

One of the biggest risks to France’s economic growth is the cost to the food processing industry which rely on imports to be competitive, and consumers who spend more of their disposable income on less. 

If France forges ahead with the Nutella Tax that discriminates palm oil from other vegetable oils, such a move will only serve to make food unnecessarily expensive to the French public. 

From an international trade perspective, Alan Oxley, World Growth chairman and former chairman of the GATT, the predecessor of the World Trade Organisation (WTO) commented the Nutella Tax jeopardises France’s trade relationship with fast-growing economies like Malaysia, Indonesia and Africa.

World Growth, in its latest newsletter, noted the 400 per cent tax hike on palm oil will invite retaliation against French exports such as aerospace, automobiles, wine and military equipment. 

“It is ironic France finds itself facing this prospect. Just a few months back France’s own trade minister, Nicole Bricq, declared France would practice ‘reciprocity’ if emerging economies erected barriers to French exports. 

Now France is inviting retaliation against French exports,” said Oxley.

French farm interests, such as producers of higher cost oil seeds — sunflower and rapeseed — appear to have pressured France’s Senate and now retailers like Casino and System U refuse to stock up on products containing palm oil, on the belief it puts human health at risk.

Oxley highlighted that France’s Nutella Tax appears challengeable under WTO rules. 

“The WTO Sanitary and Phytosanitary Agreement makes it clear that it only permits restrictions on imports on health grounds if there is scientific evidence of the damage to health and there has been a process of risk assessment,” he said.

Source : NST

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