NUSA DUA, BALI – Deputy Minister of Foreign Affairs of the Republic of Indonesia, Arif Havas Oegroseno, highlighted the inequality in the application of global regulations and sustainability standards to the palm oil industry. According to him, various international pressures on the palm oil commodity do not only affect plantation companies, but also have the potential to burden millions of smallholder farmers who are an important part of the world palm oil supply chain.

Arif conveyed this in a Special Address at the opening of the Indonesia Palm Oil Conference (IPOC) 2026 in Nusa Dua, Bali, Thursday (12/11/2026). He emphasized the importance of applying the principle of due diligence that is fair, consistent, and applies equally to all parties in global trade.

“Attacks on palm oil are attacks on the smallholder farmers of developing countries,” Arif stated in the forum.

Smallholder Palm Oil Farmers Contribute Greatly to Global Production

Arif reminded that the global palm oil industry is closely linked to the lives of rural communities, especially small-scale growers in producer countries.

Citing an estimate from the United Nations Conference on Trade and Development (UNCTAD), there are around 7 million smallholder growers in various countries who contribute up to 40 percent of total world palm oil production.

In Indonesia, more than 40 percent of the palm oil plantation area is managed by smallholder farmers. Nearly 3 million growers depend their livelihoods on this commodity.

The contribution of smallholder farmers is also visible in other producer countries. Malaysia has around 500 thousand smallholder growers, while in Nigeria farmers contribute more than 80 percent of production. In Colombia, around three out of four palm oil producers come from small-scale grower groups.

The magnitude of this contribution shows that trade policies and international regulations on palm oil have broad socio-economic consequences. The impact does not stop at companies or exporters, but can also reach farmers in the upstream part of the supply chain.

Four Global Pressures on the Palm Oil Industry

In his presentation, Arif identified four forms of pressure faced by the palm oil industry in the international market, namely regulations, trade tariffs, financing policies, and negative narratives.

These four aspects are considered able to affect the competitiveness of palm oil, especially if applied without considering the conditions and capacity of business actors in producer countries.

One of the issues highlighted is the application of financing requirements by a number of European financial institutions to the palm oil plantation sector. Arif assessed that there is inequality when the palm oil industry faces strict environmental and sustainability requirements, while other industrial sectors do not always receive similar treatment.

He compared financing requirements for palm oil farmers with financing for the arms industry. According to him, palm oil farmers are required to prove that their business activities do not cause environmental damage, while financing for the arms industry is considered to rely more on creditworthiness and the ability to repay loans.

This comparison is a criticism of the consistency of the application of sustainability principles and responsibility in the global financing system.

Traceability and Geolocation Requirements Become a Challenge for Farmers

One of the important issues that was also highlighted is the increasing administrative demands in international palm oil trade.

Farmers and palm oil business actors are required to provide various information to meet supply chain traceability requirements, geolocation mapping of land, and plantation legality documents.

These requirements are related to efforts to ensure the origin of products and prove that the traded commodities do not come from deforestation activities.

However, the ability to meet these administrative and technical requirements is not always the same between large companies and smallholder farmers. Smallholder farmers, especially those with limited access to technology, assistance, and financing, have the potential to face a greater compliance burden.

If they are unable to meet the specified requirements, products risk losing access to certain markets. This condition can also affect farmers’ access to financing and partnerships in the supply chain.

Therefore, the application of sustainability standards needs to be accompanied by real support in the form of strengthening farmer institutions, technical assistance, capacity building, and the provision of data and traceability infrastructure.

The Importance of Consistency in Global Sustainability Standards

Arif also highlighted the relationship between European public funding, the activities of a number of non-governmental organizations (NGOs), and policy advocacy processes related to restrictions on palm oil trade.

He questioned the consistency of policy when organizations that campaign for palm oil restrictions receive funding from European public sources and at the same time carry out advocacy to regulators.

In addition, Arif compared environmental reporting demands on the plantation sector with global military activities which, according to him, have not received equivalent emission transparency obligations.

This criticism essentially points to one fundamental issue: the application of the due diligence principle should not be selective.

In international trade, environmental and social standards do have an important role in encouraging responsible production practices. However, their effectiveness is also determined by the consistency of application, transparency, and the ability of all business actors to meet the specified requirements.

Farmer Protection Must Be Part of the Palm Oil Sustainability Agenda

The Deputy Foreign Minister’s remarks at IPOC 2026 gave attention to the social dimension in the application of global sustainability regulations. Efforts to protect the environment and ensure product traceability need to go hand in hand with protecting the livelihoods of communities that depend on the plantation sector.

For Indonesia, smallholder farmers are an important part of the palm oil industry structure. Therefore, trade policies and international sustainability standards need to consider the characteristics of people’s plantations, including business scale, administrative capacity, document ownership, and access to technology.

Strengthening the traceability system, increasing productivity, land legality, and the application of sustainable plantation practices need to be a joint agenda of the government, business actors, and farmer organizations.

At the same time, dialogue between producer and consumer countries is needed to build trade standards that are transparent, proportionate, and non-discriminatory.

The message conveyed by Arif at IPOC 2026 confirms that the palm oil industry sustainability agenda is not enough to only measure environmental aspects and administrative compliance. Sustainability also needs to ensure that millions of smallholder farmers still have a fair opportunity to participate in global trade.

Thus, the principle of due diligence should apply to all parties, starting from producers, financing institutions, organizations involved in advocacy, to regulators who set international trade policies. (*)