In Tackling Rising Food and Cost of Living Prices, the EU Finds an Unlikely Ally

As a result of the war in Ukraine,  Europe, and the world, are facing unprecedented inflationary surges, cost of living and food security crises.


MACE sat down with Larry Soon, a Malaysian politician and Chairman of the Malaysian Palm Oil Council, to learn more about how he is leading the mission to promote Malaysian palm oil, unroot negative narratives, and improve trade relations.

As a result of the war in Ukraine,  Europe, and the world, are facing unprecedented inflationary surges, cost of living and food security crises. Although Larry initially came to Brussels to speak to the European Commission about the reforms the Malaysian government is undertaking on labour and sustainability, most of his meetings ended up focusing on food security and food price inflation, he said:

It’s a very uncertain time in the world, economically, and especially in Europe because of the war in Ukraine. It has led to a shortage of sunflower and vegetable oil for cooking and food preparation – this hurts businesses across Europe, and also drives up prices for consumers. Palm oil is a crucial substitute as a food ingredient for many companies in Europe. However, Malaysia also has inflation and food price rises, and there is domestic pressure to reduce or even stop some food exports. Other countries have put these barriers in place, already during this crisis. Malaysia has not done so. We take seriously our commitment to the global food supply chain”

Malaysia has a supply of certified sustainable palm oil (CSPO) ready for European buyers, and the Malaysian Palm Oil Council is ready to step forward to increase its supply of palm oil to Europe, to help to reduce the spiralling food price inflation across the continent.

“Introducing trade barriers on food would make the global situation far worse. Malaysia has withstood pressure, and rejected trade barriers in favour of solidarity. We very much hope the EU will show the same solidarity, and will not erect regulatory barriers against palm oil.”

Palm oil is one of Malaysia’s critical sectors, representing one of its most important exports – over 400,000 small farmers in the country rely on palm oil for their livelihoods, and it generates billions of Euros in earnings.  Larry Soon is a Member of Parliament for a rural constituency in the state of Sarawak, and knows first-hand the importance of palm oil and agriculture for local communities.

“The EU is one of our biggest markets” he says, “mainly because Malaysia produces large amounts of certified sustainable palm oil, and many European governments have committed to buying certified sustainable oil. So, the sustainability element is a win-win for Malaysia and Europe.”

For several years campaigns calling for a ban of palm oil imports to Europe have created negative perceptions about the industry. Larry says one of his main goals for this first visit was to better explain the facts and realities on the ground, supported by data about palm oil, in hope to correct some of the misconceptions. 

Palm oil has often been blamed for causing deforestation; Soon suggests that’s one of the misconceptions that have taken root.

“In Malaysia, we are so proud of our track record on forest protection. Over 50% of Malaysia’s land is protected as forest area (for comparison the EU is below 40% and some Member States are as low as 11%). These are data from the United Nations FAO, and the World Bank: these are the facts direct from the experts. The claims of mass deforestation linked to Malaysian palm oil are completely, and demonstrably, false. The Malaysian government has committed publicly to maintaining these forest areas. Land area allowed for oil palm, for example, is capped at 6.5m hectares, so there will be no expansion beyond that.”

Some of the EU officials that Larry and his team has met, he says, were already aware of Malaysia’s strong track record of forest protection. He appeared confident that facts about the industry are becoming more widely-known, and paint a more accurate picture. 

Speaking about his meetings with European officials, the conversation moves to another critical issue for the EU, which is labour rights and the protection of labourers. Like many countries, Malaysia faces challenges with migrant workers, including their potential mistreatment. The palm oil sector has made major strides in recent months towards mitigating or removing the dangers for workers in the sector.

“Our commitment” says Larry, “is to improve and reform labour rights standards, implement Malaysian Sustainable Palm Oil rules, and work alongside our international partners to address the concerns that exist. This includes launching a new Responsible Employment Charter with commitments on protecting workers, no withholding of passports, and ratification of ILO Convention.”

Larry further highlights how this is doubly important, as the EU is starting to regulate on Due Diligence and on labour issues, specifically. “There is much that can be achieved through cooperation, that will result in real change on the ground, rather than using regulations to impose trade barriers.”

When it comes to regulatory barriers, Larry seems concerned that EU will continue to unfairly target Malaysian palm oil.

“Unfortunately, we have already seen the European Parliament voting to discriminate against palm oil under the Sustainable Aviation Fuels proposal. This is a protectionist and discriminatory trade barrier, in a time of a global economic crisis: it makes no sense at all” exclaims Larry. He further asks that the various EU regulations on Due Diligence, Labour, and Deforestation, reject this protectionist trap and instead adopt a non-discriminatory approach. “Malaysia has demonstrated friendship and solidarity in keeping essential food exports flowing and doing our part to constrain global inflation. All we ask is that this solidarity is reciprocated. Designating Malaysia as a ‘high risk’ country, for example, would be clearly discriminatory and unjust.”

When it comes to sustainability schemes for palm oil, Larry calls for tighter rules.

“Schemes work if they are strong enough”, he says. “The Malaysian Sustainable Palm Oil (MSPO) standard is mandatory and enforced by the government of Malaysia and all palm oil companies, across the supply chain, are committed to the full implementation our labour and human rights provisions. We are responsible for consistently updating and modernising Malaysian palm oil’s standards. A recent revision of the MSPO standard included major reforms to ingrain labour rights and workers’ rights into the heart of the standard. Malaysian trade unions and workers representatives were involved in the revision process, and the result is that MSPO is now by far the most progressive sustainability standard when it comes to protecting workers’ rights.” 

The coming 12 months will be a busy time in Brussels for Larry, and for his colleagues and competitors in the commodities sector. The Corporate Sustainability Due Diligence and Anti-Deforestation regulation are both already advancing through the co-decision process. Campaigners are pushing for MEPs to restrict imported commodities such as palm oil, or soy.

The forthcoming new rules banning forced labour, a pet project of the Commission President herself, could also be targeted at commodities from developing or middle-income nations such as palm oil from Malaysia. This is unlikely to be Larry’s last visit to Brussels.


11th August 2022