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<\/p>\nThe Netherlands has had a long-standing cooperation with Indonesia and Malaysia and is involved in facilitating a sustainable palm oil sector in both countries. This includes advocating and assisting all stakeholders in the value chain (not just smallholders), financing sustainability projects, promoting conservation compliance, and supporting action research.<\/p>\n
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One notable example is National Initiatives for Sustainable and Climate-Smart Oil Palm Smallholders (NISCOPS). The program\u2019s key performance indicators correspond to the three dimensions of Climate-Smart Agriculture (livelihoods, climate change adaptation and mitigation) and involve all levels of the value chain, from harvest to transformation.<\/p>\n
Indonesia and Malaysia are the largest palm oil producers in the world, with\u00a047 million tons and 19 million tons, respectively. It is an important commodity for both countries, since it\u00a0has the highest yield\u00a0per hectare compared to other oil crops and\u00a0accounts for approximately 40%\u00a0of all traded vegetable oil. The Netherlands stands out as\u00a0the largest importer\u00a0of palm oil within the European Union (EU).<\/p>\n
In recent years, there have been many reports that suspect the palm oil production causes deforestation, biodiversity loss, disputes between palm oil companies and indigenous people (who have historically utilized the land), a poor working environment, and income gaps for smallholder farmers. As a result, there is a growing recognition of the need for sustainable palm oil production to mitigate damage.<\/p>\n
\u2018Indonesia and Malaysia are the largest palm oil producers in the world, with 47 million tons and 19 million tons respectively\u2019’<\/strong><\/p>\n <\/p>\n Perceptions of the EUDR may vary across Indonesia and Malaysia<\/strong><\/p>\n To address sustainability concerns, the EU has developed the European Union’s Deforestation Regulation (EUDR) which aims to reduce deforestation associated with imported products, particularly those linked to key commodities such as palm oil. The relevant commodities must be traceable to known sources and cannot come from areas that have been deforested or degraded after the cut-off date (31 December 2020).<\/p>\n In Indonesia and Malaysia, perceptions of the EUDR may vary across producing countries and tend to be complex. The governments in both countries view the EUDR as unjustified and an imposition on their sovereignty, as they consider that their practices are already in line with sustainability standards.<\/p>\n In Indonesia, compliance with the EUDR will impose significant costs and operational challenges (such as establishing track and traceability systems) for palm oil producers, especially for 1.5 million smallholder farmers who rely on the palm oil industry for their livelihoods. In Malaysia, the livelihoods of more than 450,000 smallholder farmers and their families are at stake. They are most critical of the EU’s proposed criteria for creating a high-risk list of countries that are linked to deforestation.<\/p>\n Smallholder burdened by administrative and compliance costs<\/strong><\/p>\n Smallholder farmers will be disadvantaged by the EUDR as they have a limited ability to meet the regulation\u2019s requirements. More crucially, they could be further burdened by increased administrative and compliance costs. Smallholder farmers have little leverage and resources to fully take part in the palm oil supply chain due to the dominance of big corporate entities in the industry.<\/p>\n Also, the EUDR will impede the entry of goods causing deforestation, like palm oil, which will harm the countries’ economy. The palm oil sector makes up about\u00a03.5% Indonesia’s GDP\u00a0in 2021 and about 2.97% of Malaysia\u2019s GDP in 2023.<\/p>\n Joint efforts to facilitate dialogue, cooperation, and solutions<\/strong><\/p>\n Despite the challenges, the EUDR is still seen as a significant measure as it serves as a milestone and mechanism for advancing sustainable supply chains. Actions resulting from adhering to the EUDR will indirectly help in promoting sustainable land use practices, preserving biodiversity, and contributing to the mitigation of climate change.<\/p>\n Recognizing the potential socio-economic implications and the EUDR\u2019s noble cause, Indonesia and Malaysia seek to engage with the EU to address concerns. A joint task force involving both countries, the Council of Palm Oil Producing Countries (CPOPC), and an EU delegation have emerged and play a crucial role in addressing these concerns, facilitating dialogue, strengthening cooperation, and discussing mutually beneficial solutions.<\/p>\n Supporting policy coherence and constructive dialogue<\/strong><\/p>\n The agricultural team of the Dutch Embassies in Indonesia and Malaysia has been active in providing support for the respective countries. Within the joint task force, they serve as facilitators and advocates for policy coherence between the EU, Indonesia and Malaysia and they engage in constructive dialogue. The joint task force has five work streams aiming to build a common understanding of the EUDR, one of which is about traceability.<\/p>\n The Indonesian Government has initiated the Indonesian National Dashboard for Commodities (INDC) to create an integrated system to ensure accurate, reliable, and established traceability and geolocation. Malaysian palm oil stakeholders have developed Malaysia\u2019s Sawit Intelligent Management System (SIMS) and e-MSPO to improve supply chain management.<\/p>\n \u2018The Dutch Embassies serve as a facilitator and advocate for policy coherence between the EU, Indonesia and Malaysia and engage in a constructive dialogue\u2019<\/strong><\/p>\n National Initiatives for Sustainable and Climate-Smart Oil Palm Smallholders<\/strong><\/p>\n In addition to being actively involved in the joint task force, the agricultural team of the Dutch embassies (with the mandate from the Dutch Government) has initiated project collaborations between governments, businesses, NGOs, and research institutions to develop innovative solutions tackling deforestation and promoting sustainable palm oil production.<\/p>\n A notable example is National Initiatives for Sustainable and Climate-Smart Oil Palm Smallholders (NISCOPS), developed in Indonesia, Malaysia, Nigeria and Ghana from 2019-2023 with\u00a0IDH (Sustainable Trade Initiative) and Solidaridad (international networking organization) as the implementing partners. The program\u2019s key performance indicators correspond to the three dimensions of Climate-Smart Agriculture: livelihoods, climate change adaptation and mitigation. It also involves all levels of the value chain, from harvest to transformation.<\/p>\n In Indonesia, the program is mainly executed in West Kalimantan, Aceh, and North Sumatra. Tens of thousands of hectares of smallholder palm oil plantations have carried out climate adaptation practices and detailed management plans with private sector partnerships. In Malaysia, the program is executed in Perak, Johor, Sarawak, and Sabah. Together with the Malaysian Government, a monitoring system has been initiated to support deforestation-free palm oil, after an agreement was reached on a single definition on deforestation for the whole of Malaysia. The monitoring system looks at all the different classifications of forests in Malaysia. At the end of the program, a total of 15,221 smallholder farmers were trained on sustainable farm practices and diversification methods.<\/p>\n