PRESS RELEASE: PARTNERSHIP WITH PRODUCING COUNTRIES TO SAFEGUARD SMALLHOLDERS SUPPLY FOR THE EU MARKET

On 6 December 2022, the European Commission, European Parliament, and the European Council reached a provisional agreement on a proposal to minimize the risk of deforestation and forest degradation associated with products, including palm oil, that are imported into or exported from the European Union (EU). Although the new regulation is a major milestone showing the commitment of the European Union to contribute to reducing global deforestation, it has created a potential risk of exclusion of smallholders from the supply chain.

Smallholders, an important stakeholder of the palm oil supply chain, will most likely be excluded from the EU market when the EUDR is implemented. The co-legislators of the EU, the European Commission, the European Parliament and Member States have to establish approaches and measures to ensure the smallholder inclusivity to minimise risks of exclusion in the EU market. This is in line with the spirit of “leave no one behind” of the United Nations Sustainable Development Goals.

It is pivotal to build strong and structured partnerships between the EU and the palm oil producing countries to create an enabling environment for compliance with the EUDR in recognising the efforts taken to ensure the sustainable production of palm oil in producing countries. The palm oil producing countries respect the rationale of reducing deforestation and forest degradation of the EU and thus, we urge the EU to also acknowledge the efforts and actions taken by palm oil producing countries for conservation of forest and biodiversity as well as to enhance the sustainable development of the palm oil industry.

The first step towards cooperation is through positive and constructive engagement to find a win-win solution which are mutually agreeable by both parties. The EU should consider recognising the Indonesian Sustainable Palm Oil (ISPO) and the Malaysian Sustainable Palm Oil (MSPO) as important certification schemes conforming to the legality requirements of the producing countries. The producing countries welcome the cooperation with the EU to conduct assessment on challenges and potential impacts of the EUDR on oil palm smallholders in order to develop practical measures and mitigation actions to warrant the participation of smallholders. In addition, the introduction of systems and mechanisms to sourcing certified sustainable palm oil from smallholders is one key element to minimise the risks.

The oil palm smallholders account for about 41% and 27% of total oil palm planted areas in Indonesia and Malaysia, respectively. Smallholders account for about 35% to 40% of the global production of palm oil. The EU could consider innovative instruments to support and enhance the sustainable development of oil palm smallholders which include among others, capacity building, solutions to ensure traceability of the supply chain without compromising the personal data protection legislation, and development of innovative mechanisms for technical and financial support to ensure continuous improvement of oil palm smallholders.

The Council of Palm Oil Producing Countries (CPOPC) in partnership with the Solidaridad and MVO, the Netherlands Oils and Fats Industry had published a briefing paper with recommendations and possible solutions to ensure the inclusivity of the oil palm smallholders in the supply chain for the EU market under the EUDR. The briefing paper has been circulated to policy makers of the EU as part of the efforts of CPOPC to enhance the welfare of oil palm smallholders.

The Article 28 of the EUDR provides for the partnerships and cooperation mechanisms to facilitate compliance to the requirements of the EUDR. In this regard, the CPOPC is ready for a dialogue with the EU on actions and measures to safeguard the interest of oil palm smallholders in supplying to the EU market. The producing countries emphasise that the EUDR should play a role to ensure smallholders inclusivity instead of putting them in severe risks.

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