Ferrero wants fair treatment for palm oil

Resentment against palm oil is fanned largely by certain EU legislators who are trying to block the commodity from Europe


Italy’s food giant Ferrero SpA said the European Union (EU) must apply the same treatment to palm oil, like any other edible oils, and should not resort to skewed and unfair practices.

The Italian chocolatier, that produces the world’s favourite chocolate spread Nutella, has been a target for using palm oil in its products.

Resentment against palm oil is fanned largely by certain EU legislators who are trying to block the commodity from Europe. This opposition to palm oil is further heightened with the EU’s resolution to curb the commodity’s import to what is one of its largest markets. Ferrero Group head of Nutella Global Presidency Olivier Charrier said the skewed decision on palm oil creates a competitive disadvantage when other edible oils are free from any constraints.

“It has to be a fair and win-win situation as any international trade arrangement should be. If palm oil is to be segregated by 2020, the same regulation should also apply to other edible oils,” Charrier told The Malaysian Reserve recently.

Ferrero, the inventor of Rocher, Nutella and Kinder, is among the few European food companies that had defended the use of palm oil.

Ferrero uses about 160,000 tonnes of palm oil annually, and half of the purchase goes to the making of Nutella chocolate spread.

The chocolate spread alone contributes about a fifth to Ferrero Group’s business with annual sales of €2 billion (RM9.8 billion).

As part of its commitment to the environment, Ferrero only uses palm oil that has been certified by the Roundtable on Sustainable Palm Oil (RSPO).

Charrier said there should be a way to end the false palm oil-free claims and other punitive strategies in Europe.

“You don’t say it is sustainable-certified. Then, allow people to believe that a product is better if it has no palm oil content. That is false,” Charrier said.

Increasing health and sustainability concerns in Europe had seen retail sales of the hazelnut and chocolate spread in Italy dropping last year.

Reuters reported that Nutella suffered a 3% decline in sales in the months to August 2016, partly due to the palm oil-free product promotions by Ferrero’s competitors.

Perception towards palm oil had worsened over the last decade in various parts of Europe. Many food brands had capitalised on the anti-palm oil sentiment by producing palm oil-free products.

A study led by Charrier showed a significant rise in palm oil-free food between 2013 and 2015 in several Euro- pean countries including Italy, France, Belgium and Germany.

“About 70% to 90% of consumers in Europe now say they are interested in palm-oil free products.

“The only solution for them to change their opinion is to show that not only is palm oil sustainable and compliant to industry rules, but it is also the best in its class among other commodities.

“There are many other products that are driving far more deforestation, but for some reasons, palm oil appeared first on their radar.

“Industry players should take this opportunity to show that palm oil is sustainable for other commodities to follow,” he said.

Charrier believed the EU would implement actions against palm oil, either by legislating the palm oil curb resolution or imposing additional tax on the commodity.

“It will happen. If the resolution does not take place, they will go for taxes. European politicians are adamant when it comes to deforestation and the environment. They will not stop at palm oil. It will be one after another on their list,” he said.

Charrier said it is important for palm oil producers to take a proactive position by adopting the RSPO standard and confront aggressively the smear campaigns against palm oil.

Malaysia, which produces 29% of global palm oil and 37% of world exports, will host 16 EU ambassadors this month to negotiate on the bloc’s discriminatory practices against the commodity and the MSPO (Malaysian Sustainable Palm Oil) certification.

Prime Minister Datuk Seri Mohd Najib Razak is expected to meet his Indonesian counterpart on Nov 22 in Kuching, Sarawak, to discuss counter-measures on EU’s restrictions.

Indonesia is the world’s largest exporter of palm oil. Malaysia’s palm oil export is valued at RM51 billion to date.

The EU is among the biggest market for Malaysian palm oil with purchases valued at RM7.5 billion between January and August this year, followed by China (RM5.4 billion) and India (RM5.2 billion). In 2016, palm oil export revenue stood at RM67.7 billion.