Palm oil deal may affect food and grocery sector

A palm oil labelling Bill - supported by the Opposition without industry consultation in a ‘deal’ with Senator Nick Xenophon - will have significant impacts on Australia’s food and grocery manufacturers and compromise the nation’s food and grocery labelling system, the AFGC warned.

Despite being rejected by a Senate Committee last week, the Private Member’s Bill passed the Senate with amendments. The Bill calls for the mandatory labelling of palm oil on all food and grocery products, which will cost industry hundreds of millions of dollars and jobs.

AFGC Chief Executive Kate Carnell said the palm oil Opposition ‘deal’ with Senator Xenophon to pass the legislation reflected on the credibility of the Opposition. “Without any consultation with industry or consumers, the Opposition did a political ‘trade-off’ on this legislation, which will be a significant cost for an industry already under pressure,” Carnell said.

The cost of changing a single label will be between $10,000 and $19,000* per product. As there are up to 60,000 products on supermarket shelves, this equates to hundreds of millions of dollars in extra costs. (*Source: Cost Schedule for Food Labelling Changes Final Report (version 2), PWC 7 March 2008.)

“This is at odds with the Opposition’s aggressive stance on a carbon tax, saying that any new cost on Australian manufacturing at this time would cost jobs and send companies offshore,” Carnell said.

“Food and grocery manufacturers - employing 288,000 Australians including half in rural and regional areas - are already under intense pressure from a ‘perfect storm’ of rising input costs across the supply chain, 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.”

Carnell said the majority of Australian manufacturers have already announced a move to use sustainable and certified palm oil, when sufficient quantities become available, notably by 2015.

The AFGC became Australia’s first industry association to gain membership to the Roundtable on Sustainable Palm Oil, the world’s leading not-for-profit organisation supporting sustainable palm oil: www.rspo.org. Australia only uses 0.3% of the world’s palm oil.

“There is no proof or any evidence to suggest that labelling palm oil in Australia would change the level or extent of deforestation in Indonesia or Malaysia - or that labelling would save one orangutan, pigmy elephant or tiger,” Carnell said.