Source: Oleoscope (Russia)
A new EU law that comes into force on December 30 has caused concern in the Indonesian palm oil industry. Eddy Martono, head of the Indonesian Palm Oil Association (GAPKI), told the Financial Times that the law could cause chaos if it is implemented without delay.
As required by the European Union’s anti-deforestation regulation (EUDR), the new rules will require importers to ensure that their products have not contributed to deforestation in exporting countries and that the commodity production process complies with ESG regulations. Martono warned that the industry is not yet ready for such significant changes and called for the law to be delayed until 2026. Some coffee, cocoa, rubber and palm oil crops are at risk of being banned from import. Martono fears that without proper consultation between the EU and its trading partners, palm oil exports from Indonesia to the EU could fall by 30 percent.
The regulation will come into force on December 30, 2024 for companies and large traders. Large companies must comply immediately, while smaller companies have until July 2025. Non-compliance can lead to sales penalties of up to 4%. Martono criticized the lack of meaningful consultation with union representatives, which he said has led to widespread uncertainty.
Malaysia has always taken active steps to ensure that the environmental sustainability of its palm oil industry meets European standards and deforestation norms, said Plantation and Commodities Ministry (KPK) secretary-general Datuk Yusran Shah Mohd Yusof. However, he expressed concern that the Malaysian palm oil sector is still covered under the EUDR, which could affect the country’s reputation despite Kuala Lumpur’s stringent environmental standards.
This could lead to a decline in exports to the European Union (EU), which is the most important market for palm oil. He also emphasized the important role of palm oil in global food security due to its high productivity, wide range of applications and ability to improve food preservation.
Malaysia had previously committed not to establish new oil palm plantations in forested areas to support and maintain the current forest cover of 54 percent. As more than 80 percent of palm oil produced in Malaysia is exported, oil certification is critical to the industry and the national budget.