JAKARTA – The Indonesian palm oil industry is considered relatively ready to comply with the implementation of European Union Deforestation-free Regulation (EUDR). But the independent oil palm smallholders remain the most vulnerable link in the palm oil supply chain.

The Indonesian Palm Oil Association (GAPKI) Executive Director, Mukti Sardjono, made the statement during the Focus Group Discussion (FGD) as a follow-up to FOLUR with the theme “Strengthening regional preparedness for EUDR” in Jakarta.

In his presentation titled “Readiness of Indonesian Palm Oil Industry In Facing EUDR: Strengthening Traceability and the Inclusion of Palm Smallholders”, Mukti stated that the delay of EUDR had not reduced its requirements. But the delay should be taken as time for preparations.

Time extended, Demand remains

After being postponed twice, the Regulation (EU) 2025/2650 enters into force on December 23, 2025. Obligation for compliance will begin on 30 December 2026, for large and medium-sized operators, downstream operators, and traders. Micro and small operators are required to comply starting from 30 June 2027.

There are three core EUDR requirements:

• products must be deforestation-free meaning they do not originate from land cleared after December 31, 2020;
• products must be legal according to the laws of the country of origin, covering land rights, environmental regulations, and labor laws;
• products must be accompanied by a Due Diligence Statement (DDS) containing the geolocation coordinates of the land, with records retained for five years.

Under the European Commission’s classification as of 22 May 2025, Indonesia falls into the standard risk category. This means full due diligence applies without a fast-track option, and a minimum inspection rate of 3 percent is set for operators.

European Union remains important market

The European Union (27 countries) is now still the fourth largest destination of Indonesia’s palm oil exports. Its export volume tends to decline, from 3.34 million tons in 2024 to 3.24 million tons in 2025. As of June 2026, Indonesian palm oil industry’s exports to the EU were recorded at around 1.65 million tons.

Independent growers are still the most vulnerable

GAPKI has assessed the readiness of each link in the supply chain as follows:

• Large companies are relatively prepared, as they possess their own plantation data and internal systems.
• Palm oil mills, refineries, and exporters require data integration; Fresh Fruit Bunches (FFB) arriving via middlemen make it difficult to verify the plantation of origin.
• Independent smallholders are the most vulnerable; their plots are small and scattered, their legal documentation is often incomplete, and they struggle to bear the costs of mapping on their own.

The smallholders’ oil palm plantations cover approximately 6.93 million hectares, representing about 41 percent of the national oil palm plantation areas. However, it is estimated that fewer than 10 percent of these smallholders possess a Cultivation Registration Certificate (STDB) and the corresponding land map.

Challenges include limited data coverage, registries that do not track FFB flows, the informal nature of middlemen, and the administrative and financial burdens placed on smallholders.

“Regulated Inclusion” concept: Loading Ramp shouldn’t be deleted

GAPKI proposes a “regulated inclusion” approach. Under this model, loading ramps and middlemen continue to operate but are required to be legalized, record every transaction, and ensure traceability. According to Mukti, eliminating loading ramps would cut off smallholders’ access to mills, whereas leaving them informal creates loopholes regarding the origin of Fresh Fruit Bunches (FFB).

In this scheme, every transaction is recorded with the smallholder’s ID or STDB number, the weight, and the date. Digital records are linked to the mill, and verified aggregators maintain the smallholder’s identity throughout the supply chain. “The measure of success is that smallholders remain integrated into the supply chain, not merely the volume that passes verification,” he emphasized.

Regarding funding, GAPKI advocates for utilizing the Palm Oil Revenue-Sharing Fund (DBH Sawit) to register smallholders, in accordance with Ministry of Finance Regulation (PMK) 10/2026. GAPKI also proposes that the BPDP incentives prioritize smallholders who already possess an e-STDB. Cooperatives and farmer groups are considered the most effective vehicles for collective mapping and record-keeping.

Role of each stakeholder

GAPKI offers recommendations for follow-up actions across four groups:

• Government: accelerate the issuance of e-STDBs and the verification of overlapping land areas; link e-STDB data to the national traceability system; direct Palm Oil Revenue-Sharing Funds (DBH Sawit) and BPDP funds toward data collection; and maintain dialogue with the European Union.
• Palm oil mills, refineries, and exporters: map Fresh Fruit Bunch (FFB) suppliers down to the plantation level; register and provide guidance to partner of loading ramps; and establish digital transaction records.
• Smallholders and cooperatives: obtain STDB certification; organize into cooperatives or groups; retain proof of FFB sales; and participate in training on good cultivation practices.
• European Union buyers and partners: provide long-term purchasing commitments and share the costs of mapping and technical assistance, rather than merely demanding data.

Road map until June 2027

GAPKI proposes a phased roadmap:

• October–December 2026: Lock in geolocation and legality data for Fresh Fruit Bunch (FFB) suppliers destined for the European Union market and test data flows.
• Starting from 30 December 2026: Segregate supply chains destined for the European Union; volumes with incomplete data are to be diverted to other markets while the data issues are rectified.
• January–June 2027: Expand the number of smallholders holding STDB (Smallholder Cultivation Registration Certificates) and verified collectors.
• 30 June 2027: Evaluate inclusion—specifically, identifying who has been excluded and determining how to rectify the situation.

Land legality remains an absolute requirement

During the discussion session, participants from the regions inquired about the status of smallholders whose plantations are located within forest areas. Mukti emphasized that the EUDR requirements are mandatory. Plantations must be deforestation-free as of December 31, 2020, and meet legality standards in accordance with Indonesian regulations. For land situated in Convertible Production Forest (HPK) areas, there remains an opportunity to resolve status issues through local government channels. However, legalizing plantations located in protected forest areas is not feasible.

In concluding the presentation, all stakeholders were invited to address a key question: who bears the costs associated with e-STDB registration and the mapping of independent smallholders? Independent smallholders will only achieve the necessary level of readiness if they are encouraged to form groups or cooperatives and are not burdened with the full cost of compliance.

This Focus Group Discussion (FGD) was organized under the FOLUR (Food Systems, Land Use and Restoration) program in collaboration with the Directorate General of Estate Crops, Ministry of Agriculture. The forum brought together representatives from the Coordinating Ministry for Food Affairs, the Ministry of Trade, BPDP, the Agricultural Attaché of the Indonesian Embassy in Brussels, regional plantation agencies, and associations representing the palm oil, cocoa, and coffee sectors. (Fetry Wuryasti)