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EU deforestation tracking regulation sparks division among groups, producers

Workers fertilizing on an oil palm plantation.

Workers fertilizing on an oil palm plantation. Image by Agus Andrianto/CIFOR via Flickr (CC BY-NC-ND 2.0).

  • The EU is poised to adopt a regulation that bans the trade of commodities from deforestation and illegal sources as the European Parliament recently passed the law.
  • The proposed law continues to be divisive, with palm oil producing countries like Indonesia and Malaysia calling the regulation too stringent and unfair, whereas civil society groups say the bill is too weak.
  • In a recent joint statement, a group of 44 Indonesian CSOs say the EU regulation only focuses on eliminating deforestation from its supply chain, without addressing the root causes of deforestation in producing countries.

JAKARTA — As the European Union is set to adopt a landmark regulation that prohibits companies from trading commodities from deforested areas and illegal sources, the proposed law continues to be divisive.

On one hand, governments of palm oil producing countries like Malaysia and Indonesia have rejected the law, saying its requirements are too strict for producers to follow.

On the other hand, civil society groups say the EU deforestation regulation is not strong enough to achieve its end goal, which is to combat global deforestation.

Agriculture is one of the largest drivers of deforestation globally. And deforestation is responsible for about 10% of global greenhouse gas emissions that drive climate change.

The landmark law aims to tackle the EU’s contribution to this by eliminating deforestation from the supply chains of a range of everyday items sold in Europe.

The EU is responsible for 16% of tropical deforestation associated with international trade, second only to China.

The law, officially called the European Deforestation Regulation, targets cattle, cocoa, coffee, palm oil, rubber, soy and wood as well as commodities that have been fed by or made using those products, such as leather, chocolate, printed paper and furniture.

The EU is expected to adopt the law in the first half of 2023 as the European Parliament has recently passed the law. Now the law only needs formal approval from EU countries, which are represented by the European Council, for it to come into force.

The council’s approval is expected in the next couple of months.

Once that happens, large companies will be given 18 months to comply with the regulation, whereas smaller firms get 24 months.

Following the European Parliament’s approval on April 19, the government of Malaysia, the world’s second-largest palm oil producer, has issued a statement lambasting the regulation.

Malaysian Deputy Prime Minister Fadillah Yusof said the regulation is unjust and serves primarily to protect Europe’s oilseeds market, rather than combating deforestation and climate change.

Fadillah, who also serves as the minister of plantation and commodities, said the regulation is devised because EU’s domestic oilseeds market can’t compete with Malaysia’s palm oil exports.

“The Regulation is a deliberate effort to increase costs and barriers for Malaysia’s palm oil sector, including more than 450,000 smallholders,” Yusof said in a statement. “This ultimately would increase poverty, reduce household incomes and harm our rural communities — outcomes that stand in stark contrast to the EU’s commitments outlined in the UN Sustainable Development Goals.”

Back in January, he said Malaysia could stop exporting palm oil to the EU “if they [the EU] are giving us all a difficult time to export to them.”

Like Malaysia, its neighboring country of Indonesia, which is the world’s largest palm oil producer, has also accused the EU of blocking market access for their palm oil.

Musdhalifah Machmud, the deputy for agriculture to Indonesia’s chief economics minister, said that in the regulation, the EU is singling out commodities from tropical countries like palm oil.

“Why is palm oil the first commodity pointed as the one which has to be controlled?” she said during a recent seminar on palm oil in Jakarta. “What about the other commodities? Don’t you think we need to control them? Don’t they drive deforestation around the world?”

Oil palm monoculture and rainforests of Malaysian Borneo.
Oil palm monoculture and rainforests of Malaysian Borneo. Image by Rhett A. Butler/Mongabay.


Musdhalifah pointed out that the Indonesian government has rolled out a number of policies to improve the sustainability of the palm oil industry.

She also refuted the allegation that palm oil deforestation is pushing to extinction critically endangered species like the orangutan by saying the apes still have plenty of habitat left to survive.

Musdhalifah cited official data that show palm oil plantations occupy only 16.38 million hectares (40.47 million acres) of area, or 8.6% of lands in Indonesia.

Meanwhile, there are 120 million ha (296.5 million acres) of areas designated by the government as forest areas, with 22 million ha (54.36 million acres) of them being conservation forests.

“[These conservation forests are] the place to live for our wildlife, germ plasm and many others. They live in 22 million ha [of area],” Musdhalifah said. So why is the orangutan “always mentioned in all other countries? [Why do they always ask] where is orangutan, where is orangutan? They [orangutans] have plenty place to live.”

But various studies have shown that orangutans’ habitats and populations are shrinking due to deforestation for industrial-scale plantations, including palm oil.

A 2018 study found that between 1999 and 2015, nearly 150,000 orangutans were lost from the island of Borneo, which is shared among Indonesia, Malaysia and Brunei, due to habitat loss and killing.

The study found rates of orangutan decline were highest — 63-75% — in areas deforested or converted to plantations in both Kalimantan, the Indonesian portion of the island, and the Malaysian state of Sabah.

This deforestation has pushed orangutans out of their natural habitat and forced them to live in corporate concessions.

A 2022 report by Amsterdam-based sustainability consultancy AidEnvironment found that only 3.46 million ha (8.5 million acres) of orangutan habitat were in areas with protected status, such as national parks, nature reserves, game reserves and protected forests.

Meanwhile, almost double this amount, 6.22 million ha (15.37 million acres), lay within corporate oil palm, logging and industrial tree concessions, according to the analysis.

And if the current pattern of deforestation continues, forest loss in Borneo will destroy the habitat of more than 26,000 orangutans, a quarter of the population of the critically endangered species, by 2032, according to a 2022 study.

Areas near lands that have already cleared as well as industrial timber and oil palm plantation concessions had the highest potential for deforestation, the study found.

Therefore, to protect the remaining orangutan habitat, the study called for curbing deforestation in and around plantation landscapes.

This is why efforts such as zero-deforestation pledges, sustainability certification, ecosystem restoration and a halt on clearing land are important, activists say.

And this is where the EU deforestation regulation could play a role, they added.

Orangutan in Central Kalimantan. Photo credit: Rhett A. Butler
Orangutan in Central Kalimantan. Image by Rhett A. Butler/Mongabay.

Call for stronger regulation

However, in order to be effective in preventing and reducing deforestation, the EU regulation needs to be strengthened, activists say.

A group of 44 civil society organizations recently issued a joint statement saying the current iteration of the EU regulation focused only on cleaning the supply chain of commodities and products entering the EU market as well as those traded within the region.

And it neglected to consider providing incentives and support to help producing countries in tackling the root causes of deforestation through means such as policy reforms and governance improvements.

“What will happen is that smallholders will be excluded from the supply chain because they will find it difficult to fulfill the criteria of the regulation,” Mardi Minangsari, director of Indonesian environmental NGO Kaoem Telapak, said as quoted by daily newspaper The Jakarta Post.

Indonesia-based nonprofit Center for International Forestry Research (CIFOR) scientist Herry Purnomo said the EU and producing countries like Indonesia should look at the example of Indonesia and the EU’s timber-legality agreement called VPA.

Under the agreement, signed in 2011, Indonesia and the EU work together to develop a system, known as the SVLK, to verify the legality of its timber exports to the EU. The system, recognized by the EU in 2016, ensures that no illegal timber could enter the EU market in an effort to combat illegal logging and deforestation in Indonesia.

Herry said the VPA agreement is an example of how Indonesia and the EU could work together for a shared goal.

“The cooperation [between Indonesia and the EU for sustainable palm oil] has existed, but it’s not as strong as the VPA agreement,” he told Mongabay.

Herry said the discussion around the EU deforestation regulation has been divisive, with the EU and producing countries attacking each other instead of collaborating.

“Collaboration can only happen if both parties are open [to each other],” he said.

What’s hampering collaboration in the EU deforestation regulation is the difference in perception between the EU and producing countries, Herry said.

“The EU see us as destroying orangutan [habitat], [whereas] we see the EU as discriminating [against us],” he said. “however, our goal is actually the same. All of us want sustainability. That’s why I’d like to point out that article 33 of our Constitution clearly mandates sustainability [in our economic development].”

Mangroves cleared for oil palm.
Mangroves cleared for oil palm. Image by Teguh Suprayitno/Mongabay Indonesia.

Other criticisms

The group also criticized the regulation for adopting definitions of deforestation and forest degradation that they perceive as too weak to tackle deforestation.

The group pointed out that the regulation only considers clearance of forests as deforestation when trees are cut down for agricultural use.

But when they are for infrastructure development, mining and other purposes, it is not perceived as deforestation by the regulation.

The regulation also doesn’t consider the clearance of agroforestry trees as deforestation.

This is because the regulation adopts a forest definition that doesn’t include agroforestry, including systems that have been practiced for generations by Indigenous peoples and local communities.

“[This] will make forests managed by Indigenous peoples vulnerable to conversion without being seen as a deforestation practice,” the group said.

The regulation also has a narrow definition of forest degradation, which only covers the conversion of forests into another use. It doesn’t cover the conversion of primary forest or naturally generating ones to plantation forests.

“Thus, poorly managed secondary forests which impact on reducing the ecological function of forests are not categorized as forest degradation and are accepted by the EU deforestation regulation,” the group said.

The group also criticized the regulation’s cutoff date of Dec. 31, 2020. This cutoff date means the EU bans only commodities that come from lands that are deforested after 2020, not before.

Producing countries like Indonesia and Malaysia support the cutoff date because most plantations were established before 2020, and thus producers can focus on enhancing productivity and sustainability without expanding into new land.

However, the group said the cutoff date as turned “a blind eye to commodities linked to prior deforestation and forest degradation.”

“This ignores the fact that the year 2000 to 2020 was a period in which deforestation occurred massively in producing countries, as revealed through monitoring results by various civil society organizations and research institutions,” the group said.

Agus Purnomo, a director at Indonesian palm oil giant Sinar Mas Agro Resources and Technology, said the cutoff date should be seen as something positive, as it means the EU deforestation regulation adopts a forward-looking perspective, instead of looking at historical deforestation.

“It’s oriented toward the future, [focusing on] how deforestation doesn’t happen from now on, instead of stuck in the past,” he told Mongabay. “Because if we want to talk about the past, why not make the cutoff date 1900, where deforestation happened much more in Europe and in the U.S.?”

Herry of CIFOR pointed out that while most plantations had been established before 2020, the Indonesian government’s policy still allows for 3 million ha (7.41 million acres) of planned deforestation for various purposes, such as roads, infrastructure and agriculture, until 2030.

With the 2020 cutoff date, Agus said palm oil companies in Indonesia shouldn’t have any issues in complying with the EU regulation, as they’re no longer expanding into forests.

However, he took issues with the regulation’s classification system. Under the system, the legislation will classify exporting countries based on their deforestation risk. Low-risk countries will have a simpler due diligence procedure while more high-risk countries will have to go through more rigorous checks. The checks will make use of geolocation coordinates, satellite monitoring tools and DNA analysis that can trace product origins.

Agus said if Indonesia is labelled as a high-risk country, then it’ll be more difficult for palm oil producers in the country to export their goods to the EU.

“There’ll be so many additional requirements, and this will make our products too expensive in the European market. That’s effectively a ban,” he said. “That’s an unfair competition.”

And this categorization of high risk could also be used by other markets like India and China to lower the price of Indonesia’s palm oil, Agus added.


Banner image: Workers fertilizing on an oil palm plantation. Image by Agus Andrianto/CIFOR via Flickr (CC BY-NC-ND 2.0).


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