Leading Indonesian think-tank INDEF has said the EUDR will have a negative impact on smallholders. Tauhid Ahmad, the executive director of INDEF, detailed these concerns in a wide-ranging interview on CNBC Indonesia last month. INDEF recently held an event on the impact of the EUDR and published a discussion paper on how Indonesia’s certification systems can assist Indonesia’s farmers meet the EU requirements.
Ahmad stated, “The introduction of the EUDR will be additional work and, yes, it will be burdensome. This is not only for business people but also for smallholders because it is not easy to fulfill certain requirements.” He highlighted the complexities involved in the palm oil supply chain, from the harvesting of Fresh Fruit Bunches to processing and refining, underscoring the difficulties smallholders face in meeting these stringent EU standards.
Discussing the immediate impacts, Ahmad noted, “In the short term, the market will likely be fulfilled by products from [larger] companies. For regular planters and people, it will be difficult due to problems we discussed earlier, such as legality aspects and other requirements requested by the market.” He elaborated on the broader implications of these regulations, indicating that even products with minimal palm oil content would need to demonstrate compliance with deforestation-free standards.
Ahmad warned of long-term consequences, saying, “This situation can potentially harm smallholders in the long run. In the short term, our market share in Europe might reduce because smallholders can’t comply, and neighboring countries might take over our share. However, the long-term economic impact is more significant and will be felt by the industry as a whole.”
He urged the EU to reconsider their current approach, stating, “The EU should understand the problem, which is that [implementation] takes time and needs a process for updates and re-discussions because the current standards are too strict.” Ahmad emphasized the need for a certification process and traceability methodology tailored to Indonesian conditions and aligned with the ISPO.
Ahmad highlighted the necessity for Indonesia to prepare for these regulatory changes, despite initial resistance. He asserted, “We should not wait until the agreement or regulation continues to pressure us. We must also make efforts to accelerate… so smallholders can comply with the terms of the EUDR.” His statements underscore the need for adaptability and proactive measures to safeguard the interests of Indonesian smallholders in the evolving landscape of global trade regulations.
Watch the full interview here.