It is rare for the industry and campaigners to be on the same side on an issue of public health - but Denmark's controversial fat tax seems to have united them.

The country's government is said to be on the brink of scrapping a tax on saturated fats in food, less than a year after bringing in the policy. Reports in Denmark have claimed the government is looking to drop the levy, which was introduced in October in a bid to discourage consumption of certain foods.

Industry representatives and campaigners have been critical of the tax. The Danish Food Workers Union told just-food plans to scrap the levy were "a victory for common sense". Denmark had been praised by campaigners for introducing the tax but the way it has been levied has proved less popular. "It was a do-nothing tax," the UK's National Obesity Forum said, which argued levies needed to be set much higher.

That said, even though a number of countries use fiscal measures to try to reduce consumption of 'junk food', Denmark's apparent U-turn will add fuel to the belief that levies like the sat fat tax are ineffective. The industry argues all stakeholders need to work together to combat obesity and, in any case, it argues the reformulation of products proves manufacturers are taking the issue seriously. However, it is also true to note that recipe changes have come amid pressure from government regulators, public health organisations, campaigners and consumers.

However, the food industry will need to ensure it continues its efforts. Governments around the world are looking for ways to improve public health (and reduce obesity's burden on public finances) and tax will remain a solution. Just last month, the Israeli government said it was looking to tax "unhealthy food".

Dairy processors were a voluble critic of Denmark's sat fat tax. Arla Foods claimed the levy would hit sales in Denmark by around US$22m. The Lurpak butter manufacturer issued its half-year results today and reported a drop in profits. It pointed to a fall in global milk prices for the lower earnings.

Notably, two hours later, Arla announced plans to increase the price it pays UK farmers for milk. The hike comes after a summer of discontent in the UK dairy industry, with farmers protesting across the country at the price they receive for milk. Last week, another processor hit by the protests, Robert Wiseman Dairies, said it would make how it decides what to pay its suppliers more transparent. And this morning, to add to the sense of co-operation in the industry, Dairy UK, the processors' organisation, and farmers representatives at the NFU, unveiled an agreement on a "code of practice" they say will improve relations in the sector.

Looking ahead to this week, Morrisons, a UK retailer harshly criticised for the price it paid farmers (it since upped the price it pays), reports half-year results on Thursday. The UK's fourth-largest grocer is expected to report a fall in profits amid a decline in like-for-like sales. Morrisons' new "fresh format" stores have faced criticism and even the retailer's founder, Sir Ken Morrison, expressed concern the company was neglecting its core consumer. Certainly, Morrisons has only belatedly decided to offer consumers vouchers, which has been a key competitive weapon in the UK in recent months.

And this week there is a key event in the US investor calendar with Barclays Capital's Back-to-School conference. Among the companies presenting is Kraft Foods, which, next month, will split in two. The Cadbury and Oscar Mayer manufacturer will outline the priorities of the two new companies - the North America focused Kraft Foods and Mondelez International, the global snacks group. Keep your eyes on just-food for news and views from the event.

Until next time...

Dean Best
Managing Editor
Web: http://www.just-food.com
Email: editor@just-food.com
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