Is the Palm Oil Sector in Indonesia and Malaysia ready to comply with the European Union Deforestation Regulation (EUDR)? A Preliminary Analysis

The European Union (EU) recently introduced a new regulation pertinent to commodities trade through the European Union Deforestation-free Regulation (EUDR). While this is expected to halt EU’s contribution to global deforestation and forest degradation (DFD), the Regulation is likely to impact the commodities producing countries, including those producing palm oil, an agricultural crop that is highly traded in internationally. Main palm oil producing countries Indonesia and Malaysia have already established their mandatory national palm oil sustainability certification i.e. Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO). As the EUDR recognises third-party verification and certification for providing supplementary information, this study seeks to understand to what extent these mandatory schemes comply with the EUDR by applying an Assessment Framework specifically addressing the EUDR requirements and followed by experts semi-structured interviews. It is found that both ISPO and MSPO still fall short in meeting the EUDR requirements. While some indicators within the Assessment Framework are already fully covered, ISPO and MSPO would need to integrate/revise their systems and standards to address the needs of independent/subsistence smallholders within the EUDR framework and similar Regulations from the demand side of the market.