Palm oil can currently be listed as vegetable oil on packaging, and the Amended Truth in Labelling - Palm Oil Bill is aimed at making consumers aware of palm oil as an ingredient. The bill will next go to the House of Representatives, where if passed, it would become law.
Originally proposed by independent Senator Nick Xenophon, the bill is based on environmental concerns citing deforestation in Indonesia and Malaysia for palm oil production.
Xenophon has said the bill would allow food manufacturers to label whether they use certified sustainable palm oil, which would in turn support palm oil sourced from ‘green’ plantations.
Malaysian palm oil producers worried
Almost immediately after the bill passed the Senate, international governments and food industry representatives criticised it, saying it was illegal and discriminatory.
The Malaysian palm oil lobby had opposed the bill, with the Malaysian Palm Oil Council putting their case before a Senate committee public hearing in April.
Y.B. Tan Sri Bernard Dompok, Malaysia's minister of plantation industries and commodities, said that labelling palm oil purely from the perspective of sustainable production was discriminatory.
He also stated that in comparison, competing vegetable oils were not required to be labelled, which makes the bill discriminatory of only one type of oil.
Dompok stated that the bill did not take into account that the palm oil sector has contributed substantially towards addressing rural poverty and generating employment in the agricultural sector.
Australian and New Zealand fear rising costs
The Australian Food and Grocery Council (AFGC) also criticised the bill in a statement, saying it would have significant impacts on Australia's food manufacturers.
It said the cost of changing a single label would be between AU$10,000 to AU$19,000, which equated to hundreds of millions of dollars in extra costs as there are up to 60,000 products on supermarket shelves.
This would hit food manufacturers very hard as they are already under pressure from rising production costs, it said.
The AFGC added that the bill was unnecessary, as a majority of Australian manufacturers had already announced a move to use certified sustainable palm oil when enough is available, notably by 2015.
The New Zealand Food and Grocery Council (NZFGC) supported the AFGC in its condemnation of the bill, saying increased costs of labelling would hit New Zealand families.
It added that the bill breaches the Australia New Zealand Food Treaty, which says that Australia shall not introduce any amendments to food law “without effective consultation with New Zealand during their development.”
The NZFGC claims that no such consultations with New Zealand have taken place.
Tim Wilson, director, IP and free trade unit and climate change policy at Melbourne-based think tank Institute of Public Affairs, said that the bill is discriminatory to palm oil.
“More broadly it may violate international trade laws by establishing separate standards from international norms creating a technical barrier to trade,” he said.
Wilson said there have been well funded and orchestrated campaigns by developed-country activists against the palm oil industry and in reality the argument is about whether countries should be able to economically develop.
“Clearly the objective is to harm the palm oil industry by promoting consumer boycotts, but whether that actually occurs is yet to be seen,” he added.
Wilson predicts that if the bill is passed, manufacturers will most likely switch oils and that will directly impact the global price of palm oil, harming manufacturers and consumers.
He said if customers actually cared for the reasons behind the bill, the country would have already seen voluntary labelling.