The European Union needs to pursue dialogs with all countries affected by its implementation of European Union Deforestation-free Regulation (EUDR) to sort out their differences on definitions of forest and deforestation, and other problems related to regulatory gaps, smallholders and technical applications in the producing countries. Enforcing the EUDR without considering the particularities of the impacted countries will only mean EU  exercises regulatory imperialism.

Such is a conclusion taken from one session of the Indonesian Palm Oil Conference (IPOC) 2023 in Nusa Dua, Bali, last week, when speakers and participants immersed in a serious discussion on EUDR moderated by Professor Pietro Paganini of John Cabot University of Rome.

The EUDR prohibits seven commodities—beef, cocoa, coffee, palm oil, rubber, soybean, wood, to enter or be exported from EU, unless they fulfil three requirements: deforestation free, compliance with relevant legislation in the producing countries, and covered with due diligence statement. The due diligence will require collecting information, data and documents, including products’ description, quantity, country of production, and geolocation.

The EUDR also applies a country benchmarking system and categorizes the palm oil producing countries into three, namely low, medium, and high risk, and they will publish the countries based on the risks.

Agus Purnomo, Director of PT SMART Tbk and Senior Advisor Golden Agri Resources Ltd, said during the session that the definitions of forest, deforestation and forest degradation in EUDR are different from those in the affected countries’ forestry laws.

According to him, the EUDR defines forest as land spanning more than 0.5 hectares with trees higher than 5 metres and a canopy cover of more than 10%, or trees able to reach those thresholds in situ, excluding land that is predominantly under agricultural or urban land use. EUDR also differentiates primary forest and “naturally regenerating forest”.

But according to Indonesian Forestry Law, forest is an ecosystem entity consists of lands dominated by trees with biological diversity resources in an integrated and unseparated entity within the natural environment.  “Forest land is a specific land area that is designated or stipulated by the government to be maintained as permanent forest.”

EUDR defines deforestation as conversion of forest functions into agriculture land or plantation. It is different from Indonesian Forestry Law on Deforestation that in principle a conversion of forest into rubber forest or other species of timber plantation, such as eucalyptus for pulp industry, is categorized as secondary forest that still has similar functions to forests, except on maintaining natural biological diversity.

“The difference of definitions on ‘forest and deforestation’ between EUDR and Indonesian Law needs continuing discussions between EU and Government of Indonesia, involving academia and civil society,” he said.

The Council of Palm Oil Producing Countries (CPOPC) Secretary General DR Rizal Affandi Lukman stated that the CPOPC has repeatedly asked the EU to give special treatment to smallholders in the implementation of the EUDR. The smallholders are seen not prepared to deal with the EUDR implementation if compared to companies which are seen more prepared although they will be also facing serious difficulties.

“Before the EUDR, the smallholders have been already facing problems to meet sustainable production. The problems include less suitable soils, poor management capacity and low adoption level of good agricultural practices, weak organization, lack of access to good quality of planting material, and poor access to formal financing facilities,” he said, adding that definitions of smallholders are also different among EUDR, Indonesia and Malaysia.

According to him, the palm oil is an important economic catalyst for the lives of more than 3.0 million oil palm smallholders across the globe. They consist of 2.6 million smallholders in Indonesia, representing 41% of total oil palm plantations in the country,  450,000 smallholders in Malaysia, representing 27% of its total plantations, and the rest in other producing countries.

Indonesia’s Ambassador to Belgium, Luxembourg and EU, DR Andri Hadi mentioned about the inclusivity of smallholders in supply chain to avoid any disruption in supply of vegetable oils once the EUDR implemented. Besides difficulty in providing geolocation data, traceability will be a crucial challenge for smallholders as they rely on intermediaries and middlemen.

“An inception of trial period is needed to ensure a smooth transition at the beginning of implementation in early 2025, including an extension for smallholders in the producing countries,” the Ambassador said.

According to him, the EU’s country benchmarking system is unacceptable, as it will legalize the practice of regulatory imperialism in a modern and advanced world. “EU should consider toning down the harsh term “high risk and low risk” into a softer term : Tier 1, 2, etc,” he said.

He said that combating deforestation and forest degradation is a priority in Indonesia’s policy. “The FAO has admitted Indonesia as a success example of preventing deforestation through the implementation of its forest moratorium policy and permanent ban on clearing primary forests and peatland during the last few years,” he said.

The World Resources Institute (WRI) reported in July 2023 that most recent data on global deforestation shows that Indonesia has reduced its deforestation rate in primary forests by 65 percent since 2015. That is more than any other country over the same period.

The WRI report states: “Government policies and corrective actions have contributed to this reduction, in line with reaching Indonesia’s target of net sink (meaning negative CO2 emissions) from the forestry and other land use sectors by 2030. Increased fire prevention and monitoring efforts, termination of granting new licences on primary forests and peatland, law enforcement, and a renewed commitment not only to protect and restore peatlands but also to rehabilitate mangroves have led to fewer fires and less primary forest loss.

Ambassador Andri said the EUDR is like one size fits all, without accounting for the particularities of each impacted country. “It does not create a win-win solution. Each country has their own dynamics of sustainability practices in producing their respective commodities. The EU benefits from the availability of the commodities at the same price, while producing countries suffer due to additional requirements for entering the EU market,” he said.

Considering all those facts, he urged the EU to recognise national sustainability certifications as significant parameters at least in the due diligence. “Indonesia has the right to development while also balancing its responsibility to curb deforestation. Sustainability should go hand in hand with the pursuit of producing countries’ economic development,” he concluded. Benget Besalicto ST