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The Reasons to Reject EUDR Would Need Supports Globally

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The Reasons to Reject EUDR Would Need Supports Globally

InfoSAWIT, JAKARTA – Indonesian Palm Oil Association (IPOA) was happy because its rejection since 2022 about European Union Deforestation Regulation (EUDR) for some agricultural products, namely palm oil, has been supported by the governments, and business associations whole over the world.

Last week, the United States of America (USA) and agricultural producers urged European Union (EU) to postpone EUDR implementation that was scheduled to run since on 31 December, to ban agricultural product imports that were produced from the areas that were having deforestation since December 2020.

USA concerned about the worries in Asian, South American, and African countries that UEDR would significantly escalate administrative costs that would be burdened for the smallholders (farmers) because the terms and conditions to prove that the import products did not derive from deforestation areas by relying on geologic and satellite data.

We could imagine that the complex bureaucracy procedures would be qualified in due diligence which is very compressive, and the close traceability obligation.

In EU itself, ministers of agriculture from about 20 members of EU, which are led by Austria and Finland – also warned (in April) that EUDR would create the new bureaucracy block for risky agricultural sectors and would deliver loss of investment and distort competition.

Chairman of IPOA, Eddy Martono said for many countries are not satisfied with the time limit and the complex parameters in EUDR, it is predicted, the terms and conditions would be clarified and the implementation would be postponed.

The postponement would enable the members of EU Parliament to escalate the clarification about detail criteria and would enable other parties that would be hit by the regulation, such as, producer countries and importer companies in EU, would be ready to qualify the terms and conditions.

Indonesia, as the biggest palm oil producer in the world, continuously does campaigns to fight EUDR. It is not about the ignorance about EUDR but also it is not technically and administratively good namely for about six million smallholders in this country and hundreds of other smallholders in Africa, Latin America, and Asia.

The commodities that should obey EUDR are rubber, coffee, cocoa, soybean, wood, livestock, and their derivative products.

Besides as the biggest palm oil producer within annual production about 51 million tons, Indonesia is also the second biggest rubber producer in the world, wood, coffee, and cocoa supplier. Senior officer at Coordinator Ministry in Economy and Florica, Fink-Hooijer; General Director of Environment EU Commission did meet in Bali on 21 May in the spare time of World Water Forum. They discussed the transition of Indonesia heading to free-deforestation supply chain but failed to come to conclusion.

EU insisted to implement EUDR by the late of this year even though there would be risks to barrier trade.

The strong opposition that Indonesia delivered for EUDR should not be meant as the country that ignores forest protection and mitigation to the climate change impacts.

The Government of Indonesia and private sectors have done much to escalate traceability and transparent supply chain on sustainable commodity which is managed by National Dashboard Initiative that covers the roles of smallholders.

But Indonesia, just like the other developing countries, would need more time to accomplish the legal condition review, particularly for the smallholders, in this case, palm oil, that covers about 40% of the total palm oil plantations.

The smallholders do have rubber, coffee, and cocoa plantations

This is about to escalate technical complexity about the map, due diligence process, data privacy, and traceability obligation to make and realize more sustainable supply chain,

The problem is that the obedience to EUDR would closely need supply chain documents, traceability, and obedience to law and regulation locally.

The main issues for Indonesian exporters are the due diligence, data spots, and legal documents that the companies should collect.

Of course, the smallholders and medium scale – plantation companies would need more time and technical helps to support supply chain issues because of the lack of infrastructures and resources to obey the traceability (condition).

Only few smallholders from about tens of million smallholders/farmers in palm oil, rubber, coffee, and cocoa could show geolocation and legal evidences.

Many small and medium businesses operate in remote areas with limited access and technology and they may not understand about the complex EUDR.

Besides, the traceability system application and monitoring mechanism to track down the origins of product in every supply chain would significantly need investment namely in technology, capacity development. This would certainly spend much.

That is why, the Government of Indonesia and private plantation companies should cooperate, negotiate with EU Commission about the adjustment needed in EUDR terms and condition, and also the implementation time. The next chance should be about having dialogue by meeting three taskforces among Indonesia, Malaysia, and EU in Brussels that would be in September 2024.

But the campaign to change or substitute the terms and conditions in EUDR should not loosen the commitment of Indonesia to reinforce sustainable practices in the commodity production.

Both the government and private sectors should show their strong commitments to implement sustainable environmental cultivation and responsible business practices. The implementation of Indonesian Sustainable Palm Oil should be faster.

The consumers that concern about environment in the world would eventually care about the climate change and the environmental damage impacts to their qualify of lives, would choose agricultural products that were sustainable, socially, and environmentally produced.

Agricultural producers both the smallholders and stakeholders, should do the best to obey environmental, social, and governance (ESG) principles. If they do not, their products would be able to traded in the markets. The responsible investors would ignore every company that does not obey ESG principles. (*)

By:  Edi Suhardi  and Agam Fatchurrochman /Sustainability Analysis and IPOA Coordinator.

Disclaimer: this article is personal opinion and the writer is fully in charge. There is nothing to do with InfoSAWIT.