Indonesia and Malaysia, the world’s two largest palm oil producers, are in negotiations with their European Union (EU) counterparts, hoping the bloc will refrain from implementing stringent measures that may hammer the palm oil industry in its upcoming deforestation law.
Officials from the two countries met with leaders of the EU Commission and Parliament on May 30 and 31 to negotiate the terms of upcoming legislation called the EU Deforestation Regulation (EUDR), which will tighten rules on trading commodities associated with deforestation.
The talks were led by Indonesian Coordinating Economic Minister Airlangga Hartarto and Malaysian deputy Prime Minister and Plantation and Commodities Minister Datuk Seri Haji Fadillah Yusof.
They are pursuing to resolve several issues, namely, smallholders in the supply chain, acceptance of the national sustainable certification schemes, the law’s benchmarking system, geolocation, as well as land legality and traceability, according to the Council of Palm Oil Producing Countries.
“The EUDR will likely narrow smallholder farmers’ access to the EU market due to difficulties in fulfilling the requirements of proof of land legality and the geographical location of their plantations,” the office of the Coordinating Economic Affairs Minister told The Jakarta Post on Sunday.
The office said Indonesia’s palm oil exports to the EU had declined to 5.3 million tons last year, down from seven million tons in 2019. Similarly, the share of the world’s palm oil exports to the EU shrank to just 10.2% last year, down from 17% over the past five years.
Both Indonesia and Malaysia also expressed concern over the EU’s planned benchmarking system in the regulation, which assigns a level of risk related to deforestation and forest degradation.
The system will assign the categories of low, standard and high, with the latter resulting in more inspections and controls from the bloc to countries shipping their products to the region.
“The argumentation and methodology behind the benchmarking are unclear and would be very damaging to many countries if they were given the high-risk status,” the office of the Coordinating Economic Affairs Minister said.
In a joint statement on June 1, Indonesia and Malaysia urged the EU to classify them as low-risk countries.
Meanwhile, Indonesian Palm Oil Association chairman Eddy Martono told the Post last Friday that the industry was worried the EUDR would render the Indonesia Sustainable Palm Oil and the Roundtable on Sustainable Palm Oil obsolete.