Nutella Tax on palm oil doesn’t go down well with manufacturers, consumers

By Star Online: Business
20 November 2012

IN France, the attacks against palm oil have lately come in two major forms the “Sans Huile de Palme” (palm oil free in French) logos now prominently stamped on many food cartons and the “Nutella Tax” which will see a 400% increase in tax imposed on palm oil.

Even though the tax amendment, which was approved by the French senate last week, is still up for consideration by the French lower house, the National Assembly, if it is approved, the tax for palm oil would jump to 400 euros per tonne from the current 100 euros.

Nutella is Europe's favourite breakfast chocolate and hazelnut spread with some 235,000 tonnes produced annually by Italian company Ferrero of the Ferrero Rocher chocolates fame. In France alone, it is believed about 100 million jars of Nutella are consumed yearly.

So, why is Nutella currently being singled out by several French politicans, retail chains and Western NGOs? Some quarters said it was purely due to palm oil, which makes up about 20% of Nutella's total ingredients.

In a nutshell, the French consumers are now constantly fed with half-truth informations on palm oil and its link to health concerns leading to obesity as well as causing severe damage to the environment.

Logically, it is rather unfair to label palm oil as high saturated fats and make it take the rap for making the French people fat.

This is not true especially when the majority of saturated fats diet in France come from animal proteins such as meat, eggs and other dairy foods as highlighted by Malaysian Palm Oil Council CEO Tan Sri Yusof Basiron recently.

While some may say Malaysia is making a mountain out of the molehill over the issue, the impact of the negative campaigns is already reflected in the local palm oil exports to France, which dropped drastically to 456 tonnes in the January-October 2012 period compared with 5,019 tonnes in the same period last year.

This could trigger a situation whereby the rest of Europe might consider taking the same approach to label palm oil as unhealthy and one that affects the environment thus further limiting access to local palm oil exports.

On the other hand, the proposed “Nutella Tax” actually does not augur well with major food-based manufacturers in France which uses palm oil in their products.

Ferrero itself has maintained that it will not change the Nutella receipe and will continue using palm oil. But should the French Government go ahead with the tax, the company had warned that the price of the Nutella spread would be increased.

To date, the French Government has already raised taxes on sugary drinks and is also proposing a tax hike on beer to help plug the hole in public finances and improve the nation's health.

So what will be the next course of action for Malaysia to consider? Should government-government talks failed, some experts suggested Malaysia and Indonesia as major producers of palm oil take up the case with the World Trade Organisation to protect the legitimate interests of the palm oil industry especially when over 500,000 smallholders' income depends on the crop.

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