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Indonesia, Malaysia deploy ministers to push back on EU palm oil restrictions

Oil palm plantations in Malaysia. Image by Rhett A. Butler / Mongabay.

  • Indonesia and Malaysia will send top officials to Brussels to voice concerns over a new regulation that bans the trading of commodities associated with deforestation, including palm oil.
  • The officials will meet with European policymakers to discuss ways to minimize the regulation’s impacts on palm oil producers, particularly smallholders.
  • The world’s two biggest palm oil producers have long protested EU policies against palm oil, calling them discriminatory and protectionist of Europe’s own oilseeds industry.

JAKARTA — Top officials from Indonesia and Malaysia, the world’s biggest palm oil producers, will meet European Union policymakers in Brussels amid a diplomatic standoff over a new deforestation rule that threatens to shut the commodity out of the EU market.

The rule, formally adopted by the EU on May 16, bans the trading within the bloc of products and commodities linked to deforestation and forest degradation, in an effort to protect forests globally. To be able to enter the EU market, producers would have to provide “verifiable” information that their commodities were not grown on land that was deforested after 2020.

Palm oil is one of several commodities subject to the rule, officially called the European Deforestation-Free Regulation (EUDR), alongside beef, soy, cocoa and others. It’s a ubiquitous ingredient in processed foods, cosmetics and biodiesel, whose production has long been associated with the wholesale clearing of tropical rainforestsburning of peatlands, destruction of endangered wildlife habitatland conflicts with Indigenous and traditional communities, and labor rights abuses.

The governments of Indonesia and Malaysia, which together account for about 85% of global palm oil exports, have criticized the regulation, calling it discriminatory against palm oil since its requirements are too strict for producers, particularly smallholders, to follow.

During a bilateral meeting with EU Commission President Ursula von der Leyen in Japan on May 21, Indonesian President Joko Widodo voiced his objections, saying that Indonesia’s deforestation rate for 2019-2020 had fallen to its lowest level since 1990 and was continuing to decline.

To discuss the regulation and its implications on the palm oil industry in the two countries, Indonesia’s chief economics minister, Airlangga Hartarto, and Malaysia’s commodities minister, Fadillah Yusof, will have meetings with the European Commission and the European Parliament in Brussels from May 30-31.

“We want to stress that the EU deforestation regulation burdens small farmers because they have to follow administrative producers as required by the law,” Airlangga said in a statement. This, he said, could exclude smallholders from the global supply chain.

The meetings will thus focus on ways to minimize the negative impacts of the regulation, particularly on small farmers, he added.

EU policymakers deny allegations that the new regulation is disproportionately hard on palm oil in order to protect the EU’s domestic oilseeds market, including olive oil and rapeseed oil, which face tough competition from palm oil. They say the law applies equally to commodities produced anywhere and that sustainable palm oil can still enter the market, provided it meets the requirements.

The EU ambassador to Malaysia, Michalis Rokas, said the new regulation will not affect Malaysian smallholders grouped under the government’s federal land agency, FELDA. This is because FELDA smallholders haven’t cleared any forest to establish new plantations since 1990, long before the law’s 2020 cutoff date.

“The EUDR is purely an environmental law as the EU wants to contribute to fighting climate change and preserving forests,” Rokas said as quoted by local media. “It is a very fair regulation with respect to sustainable development goals and the eight commodities listed had been chosen through scientific studies.”

Indonesia and Malaysia have been working together on lobbying to support their respective palm oil industries against what they call a smear campaign targeted at the commodity. In 2015, the two countries established the Council of Palm Oil Producing Countries (CPOPC), an intergovernmental organization tasked to promote the global use of palm oil.

In 2021, President Widodo called for stronger cooperation with Malaysia to fight against what he called palm oil discrimination.


Banner image: Oil palm plantations in Malaysia. Image by Rhett A. Butler / Mongabay.


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