Millions are suffering because of the skyrocketing cost of food. Even as overall inflation begins to fall, food inflation stands at 16.7 per cent. Some research indicates that the cost of several staple foods has jumped by as much as 80 per cent in only one year. Pasta, cakes, and cucumbers, among other necessities, have become significantly more expensive than they were just a few months ago, leaving many households struggling to fund shopping bills – not to mention the other squeezes on family finances, such as energy bills.
Widespread global factors like supply chain concerns and the war in Ukraine may be mostly responsible for the spike in food costs. But we can improve things – or at least keep them from getting worse than they need to be – by making sure regulators don’t meddle in places where they don’t belong. In particular, the European Union would do well to heed this advice.
Vegetable oils are a good example. They are used in manufacturing a variety of essentials, from food to cosmetics. Because of how widely these oils are used, a rise in their price can have hit prices hard, which has a disproportionate impact on low-income families across the globe. Brussels, then, should think very carefully before hamstringing the vegetable oil industry with unnecessary new rules and regulations, making things worse for consumers. Regrettably, the EU is doing just that through a new law called the Due Diligence Proposal, which cracks down on palm oil imports into Europe.
European bureaucrats favour some vegetable oils – sunflower, rapeseed, and olive – over others, because they are made in the EU. The EU is taking a protectionist stance to defend European industry, even if it means denying consumers access to cheaper and better options produced elsewhere. The EU props up domestic businesses at the expense of free trade which, critically, limits consumers’ access to cheaper products, even during a cost-of-living crisis, by blocking imports for vegetable oil producers based outside of Europe.
The EU continues to push its restrictive agenda due to pressure from the vegetable oil industry, despite the predictable negative repercussions of enabling food prices to rise even faster. France, for example, holds a lot of sway within the EU. 3 per cent of the European Union’s populace works in French agriculture. France is very protective of its indigenous rapeseed oil business, and it actively works to prevent foreign products from entering the European market. The EU doesn’t hesitate to limit the continental market’s usage of alternative oils.
The EU’s blatant protectionism makes it impossible for other vegetable oils like palm oil to join European markets and compete on a level playing field. This makes no sense at all, considering that palm oil is significantly more cost-effective to manufacture than similar oils grown in Europe. The one strike against it is that it is not made in Europe. For Brussels, that is a deal-breaker, and the result is it being effectively locked out of the EU market.
Another of the EU’s stated goals, environmental protection, is undermined by this protectionist policy. The lower land requirements for palm oil production translate to lower ingredient costs for manufacturers. It’s better for the environment and makes better use of land. More palm oil equals less deforestation because it supplies 40 per cent of the world’s vegetable oil on only 6 per cent of the land used for that reason. Yet, the EU is hostile to it, giving preference to oils produced in Europe despite their greater negative impact on the environment due to their lower land efficiency. The EU’s anti-deforestation law curiously singles out commodities like palm oil that pose a threat to the EU’s domestic businesses.
Here, we find an under-discussed potential upside of Brexit. Britain can continue importing palm oil – perhaps at lower prices – once the EU effectively puts a stop to it for its 27 member states. Regardless of what Brussels does, if Britain can avoid EU protectionism by importing palm oil directly from countries like Malaysia, British customers will be able to take advantage of the cheaper pricing and contribute to decreases in deforestation at the same time.