European governments yesterday discussed ways in which to deal with the food and energy price crises, with direct specific action targeted at families who cannot make ends meet being deemed as the way forward, rather than adjustments to taxation.
Speaking to The Malta Independent from Luxembourg yesterday, Finance Minister Tonio Fenech said: “We need to adjust our economies and accept the fact that prices will increase long term, but we need to address the issue of families who cannot make ends meet.”
He continued: “If governments start to play with taxation, especially in regard to energy, we will send the message to producers to charge more for the raw materials as we would be showing them that we can ‘afford’ it. We need to take specific measures to help specific families.”
Mr Fenech said that yesterday’s meeting focused mostly on the food and energy crises. In addition, there were preparatory discussions for the Heads of Government Council to be held later this month. The theme is set to be what Europe can do to address both the above-mentioned issues.
Mr Fenech said that it would be a misconception to think that Malta suffers more than others because of import rates. “Every country in Europe and indeed the world is feeling the pinch and Malta is no different,” he said.
The Finance Minister said that this government had anticipated the spike in inflation on food and energy, and attempted to counter it by reducing tax band ceilings, increasing the cost of living allowance and exempting certain families from paying the water and electricity surcharge.
“Another issue was bio-fuels. There is debate as to whether the targets set on emissions and bio-fuel production will affect farming in Europe and whether or not these factors are piling on further pressure.
“The conclusion is that Europe needs to stick to these targets, but also needs to ensure that it does so in a sustainable manner,” said Mr Fenech.
Mr Fenech concluded by saying that there needed to be a more coordinated effort internationally to deal with the crises.
The EU finance ministers were debating the report that called on the bloc to rally international support to end export restrictions on food, offer aid to poor nations and promote the “sustainable” use of biofuels.
The European Commission’s report said changing diets and rising demand, notably in China and India, were adding to the food problems. The crisis has fuelled civil unrest and sharp food price rises.
“The most likely scenario is that global demographic trends combined with rising incomes and changed food consumption patterns... will continue to increase demand for agricultural commodities,” said the report.
It said higher oil prices, poor harvests, export curbs and low stocks have compounded food shortages along with increased speculation in grain and other commodities.
The EU has fended off allegations its push for bio-fuels – from such foodstuffs as canola, corn, soybeans and sugarcane – has triggered soaring food prices world-wide, saying increased US output is more to blame.
Less than one per cent of EU cereal production is used to make ethanol.
Two-thirds of its canola production is used for biodiesel but that production as a whole accounts for only two per cent of global oil seed demand, according to EU data.
However, these may climb sharply if the EU pushes on with an ambitious goal to ramp up bio-fuels it uses in the next decade.
Additional reporting by AP