THINK tank Datametrics Research and Information Sdn Bhd (DARE) has called on the European Union to postpone the implementation of its EU Regulation on Deforestation-free Products (EUDR) which will come into full effect from Dec 30, 2024.
While the goal of the EUDR is a noble one, the current approach raises concerns major agricultural producing countries like Malaysia, particularly with respect to the burden it places on 300,000 smallholder farmers who make up around 40% of the palm oil produced each year.
DARE’s comments follow a statement from the Malaysian Palm Oil Council (MPOC) which opined that the Dec 30 deadline is not only impractical but also burdensome for businesses and small farmers who are integral to Malaysia’s palm oil production industry.
The EUDR requires many economic operators to carry out a rigorous analysis of their supply chains to guarantee that the products they introduce into the market – or for export – do not contribute to deforestation or forest degradation, and that they are obtained and produced with full respect for the regulations of the countries of origin.
Interestingly, this is already covered by the Malaysian Sustainable Palm Oil (MSPO) certification scheme which became mandatory in 2019 – the first of its kind in the world – and now covers around 98% of the Malaysian palm oil industry.
The MSPO’s objectives are based on national and regional regulations, standards, licensing and industry best practices requirements.
As such the MSPO works more closely with state governments to resolve land issues, particularly in relation to smallholders to improve the MSPO traceability system for the whole supply chain.
However, the EU’s anti-deforestation legislation pushes European companies to consider smallholder farmers as being too risky to have in their supply chain because they are not likely to meet the requirement of the EU.
This is despite the fact that most smallholders supply mills through given that most European companies currently do not have direct contact with them.
What this ultimately means is that smallholder farmers will be forced out of the market which will have direct social and economic impacts on communities that are reliant on export-related incomes to meet their basic economic and financial needs.
“The bottom line is that in order to increase sustainability, there needs to be greater involvement of every participant in the supply chain,” opined DARE’s managing director Pankaj Kumar.
“Implementation of the EUDR presents significant challenges for smallholders who face difficulties in meeting the stringent compliance requirements. A delay in the regulation’s enforcement would give small farmers the necessary time to transition to sustainable practices in a fair and manageable way.”
Furthermore, the EU should consider recognising Malaysia’s MSPO standard as a viable compliance tool within the EUDR framework.
This recognition, according to Pankaj, will facilitate market access for verified zero-deforestation palm oil, support smallholders and promote the wider adoption of sustainable practices across the industry.
One of the most pressing concerns is the lack of clear guidelines for compliance from the EU. With less than three months remaining before the regulation’s enforcement, businesses, governments and farmers are left uncertain about how to meet the requirements.
“The EU Commission must listen to the voices of governments, industry leaders and experts worldwide who are calling for a postponement,” insisted DARE which is also a policy institute committed to research and advocacy of key sectors critical to the Malaysian economy.
“The success of the EUDR depends on its ability to balance environmental goals with economic realities.”
As it is, the call for a delay is gaining momentum globally with governments and industry experts urging the EU Commission to take swift action to avoid a chaotic implementation that could undermine the very objectives of the EUDR. – Sept 26, 2024
