Indonesia and Malaysia call for EUDR postponement amid concerns over smallholder farmers

09 Sep 2024 --- Renewed calls for the forthcoming EU Deforestation Regulation (EUDR) to be postponed are being voiced this week as palm oil stakeholders from Indonesia and Malaysia meet with counterparts in Brussels and Rotterdam for a series of discussions and events on sustainable vegetable oils. 

Hailed as a vital turning point in the global fight against deforestation, the EUDR, which entered into force in June 2023, is due to apply from December 2024. Following this 18-month transition, palm oil, coffee, cocoa and soy businesses will have to prove their products are not linked in any way to deforestation.

This proof must be backed by documentation showing that production did not involve unsustainable forest clearance. Otherwise, goods will not be allowed on the EU market. 

However, micro- and small enterprises can apply for the EUDR until June 2025 (a 24-month transition). 

The main concerns driving calls for the EUDR to be pushed back are centered on small-scale farmers from places like Indonesia and Malaysia, both major palm oil producers.

Some believe the EUDR penalizes small-scale farmers and puts them at a disadvantage compared to big business counterparts.

Chairman of the Indonesian Palm Oil Association Eddy Martono recently said: “The government is fully supporting us to ensure that the implementation of the EUDR does not place an undue burden on us. If implemented, small farmers will be the first to suffer. They may be pushed out of the supply chain.”

The main concerns driving calls for the EUDR pushback are centered on small-scale farmers from places like Indonesia and Malaysia.MEP and environmental spokesperson Peter Liese is among the voices calling for the postponement of the EUDR, stressing its impact on smallholders in developing countries. Although he backs the EUDR in terms of fighting deforestation, he is pushing for a two-year delay to its implementation so that better rules for how it applies can be established.

This is not the first time concerns have been raised over how the EUDR will penalize small-scale farmers in developing countries. Fairtrade International has also called for more financial support for small-scale farmers, while the US government urged a delay to protect food businesses. 

Key talks in Brussels

How global trade adapts to environmental regulations is crucial to the EUDR. 

The Sustainable Vegetable Oil Conference, which will take place tomorrow in Rotterdam, is Organized by the Council of Palm Oil Producing Countries (CPOPC) and the Netherlands Oils and Fats Industry (MVO). It is also supported by the governments of Indonesia, Malaysia and the Indonesian Palm Oil Association (GAPKI).

General discussions will take place around current market dynamics and palm oil sustainability, and the event will feature a session on the EUDR, including an update from the European Commission.

Europe represents Indonesia’s third-largest export market for palm oil, with annual volumes reaching 4.2 to 4.3 million metric tons. The EUDR is also concerned with other key Indonesian exports such as cocoa, coffee, rubber and wood products.

Meanwhile, there are reports of heavy stockpiling of palm oil and coffee to get shipments into the European markets before the EUDR implementation date. 

This is disrupting market dynamics and causing price increases. 

By Gaynor Selby