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Government and EU differ on palm oil traceability

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Tempo - October 4, 2024

Mansuetus Darto – On September 12, 2024, I attended a meeting of the Joint Task Force (JTF) between the European Union Commission, the Government of Indonesia, and the Government of Malaysia. All civil society representatives from Indonesia and Malaysia attended online.

This Task Force was formed in response to the European Union's new European Union Deforestation Regulation (EUDR), aimed at ensuring that products such as palm oil, coffee, chocolate, rubber and wood entering EU countries do not come from deforested land.

The EUDR was initially set to take effect in January 2025, but the European Commission has proposed extending the deadline by 12 months, with large companies required to comply by December 30, 2025, and micro- and small enterprises by June 30, 2026. Similar regulations have also been implemented by the UK and the United States.

During the meeting, the Indonesian Government highlighted its efforts to comply with the principles of transparency and traceability, or traceability in palm oil production, from plantations to finished product. The government also discussed its plan to issue a Business Registration Certificate (STDB) for small farmers.

On June 29, 2023, the EUDR regulation came into effect, giving businesses 18 months to prepare. But during those 18 months, the government was busy advocating for rejection. Instead of working on improving governance that compounds with the EUDR.

Despite the inter-governmental nature of the JTF meeting, representatives of the palm oil industry such as the Indonesian Palm Oil Entrepreneurs Association and large corporations were present, raising concerns about corporate influence on decisions related to traceability, deforestation, and transparency.

The issue of traceability is central to the EUDR, with the EU requiring every product to be traceable to the point where the fruit was produced. The Indonesian Government presented its national dashboard system, which would provide data related to polygons and coordinate points.

However, a debate emerged around transparency, as the EU requires the use of its own traceability system for products exported to the EU, whereas Indonesia proposed that the EU use data from Indonesia's national dashboard.

The EU defended its stance, explaining that the traceability system is designed for industries within the EU and that they will not integrate traceability data from producing countries. They acknowledged Indonesia's concerns but maintained that the system ensures compliance with their regulations.

The meeting concluded with a decision that the EU would create a guide for businesses to adhere to the system, with further discussions on the draft guide planned for the coming months before the regulation takes effect.

I emphasized the need for the Indonesian Government to involve civil society more in the EUDR response, particularly small farmers who work at the grassroots level. So far, there has been limited public participation in these discussions, which is a critical oversight.

Mrs. Sahli Musdhalifah, Chair of the Steering Committee of the National Data and Information Dashboard for Sustainable Commodities and an expert staff of the Coordinating Minister for the Economy, expressed confidence that Indonesia can meet the EU's forest protection standards. One of the key initiatives is the national dashboard, which would track product origins down to the map coordinates.

However, I believe Indonesia is using its data protection policy to avoid full transparency, despite the Supreme Court ruling that data related to the Right to Cultivate (HGU) should be public.

The EUDR aims to improve palm oil governance by strictly prohibiting deforestation-linked products from entering the EU. All products must undergo origin verification through land mapping technology such as geospatial, geolocation, or GPS. For smallholder palm oil farmers, plantations under four hectares, must provide a coordinate point, while larger plantations must provide polygon data. Additionally, industry players must prove that no deforestation has occurred on their plantations since 2020.

Beyond deforestation, the EUDR sets several requirements for the Indonesian palm oil industry. First, companies must offer a fair price to farmers, ensuring they are not exploited. Second, they are required to provide training on best management practices to farmers or surrounding communities. Third, industry players must produce a due diligence report on sustainable and fair palm oil governance, in line with EUDR's legal requirements.

While these regulations are designed to protect the environment, they also stand to benefit small farmers by promoting high-quality, traceable products that can enter the European market. Many oil palm farmers are already compliant with EUDR standards, with no ties to deforestation. In fact, some actively conserve forests. These farmers are ready and eager for the EUDR regulations to be implemented, as they see it as an opportunity to access European markets.

The government must now encourage plantation companies to pay more attention to small farmers, ensuring they are not left behind the transition.

Historically, farmers have been used as diplomatic tools by companies when faced with market pressures, and this must change. Small farmers are crucial to the success of Indonesia's palm oil industry, and their interests should be at the forefront of these discussions. Companies and government policies should work in their favor, rather than relying on them solely as a means of addressing international regulations.

In conclusion, while the EUDR presents challenges for the Indonesian palm oil industry, it also offers an opportunity for reform, transparency, and protection of small farmers. The upcoming regulations will require cooperation between the government, industry, and civil society to ensure that the transition is smooth and that palm oil production becomes more sustainable and transparent. With proper implementation, the EUDR could lead to significant improvements in Indonesia's palm oil governance, benefiting both the environment and the small farmers who depend on the industry for their livelihoods.

[Mansuetus Darto – Founder and National Board of Palm Oil Farmers Union]

Source: https://en.tempo.co/read/1924473/government-and-eu-differ-on-palm-oil-traceabilit

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