Indonesia’s Palm Oil Industry Welcomes EU’s Deforestation Rule Delay to 2025

The Indonesian palm oil industry welcomes the European Union’s decision to postpone its deforestation regulation by a year, now set for enforcement on Dec. 31, 2025. The delay offers time for industry adaptation, allowing palm oil businesses to comply with new rules, and address transparency in supply chains. The European Commission’s formal announcement is expected next week.

Eddy Martono, Chairman of the Indonesian Palm Oil Association (Gapki), said this delay alleviates industry concerns. The sector, he said, is already highly sensitive to fluctuations in energy prices, global demand, weather, and evolving trade policies.

“We welcome this decision as it grants the necessary time to prepare and implement full compliance,” he said at the opening of the 20th Indonesian Palm Oil Conference and 2025 Price Outlook (IPOC 2024) in Nusa Dua, Bali, on Thursday. IPOC 2024, themed “Seizing Opportunities Amidst Global Uncertainty,” is bringing together stakeholders to discuss these industry dynamics.

The European Union Deforestation Regulation (EUDR), which became law in mid-2023, mandates that products such as beef, cocoa, coffee, palm oil, and rubber must be “deforestation-free” to enter the EU market. These goods cannot be sourced from land cleared after 2020, replacing the previous EU Timber Regulation. Initially, EUDR compliance was set to begin on Dec. 30, 2024, for large businesses, with smaller enterprises to follow a year later.

Eddy said that Indonesia’s palm oil industry, a vital component of the national economy, faces challenges such as stagnant production, complex regulatory requirements, and shifting global trade patterns. The Indonesian government and industry leaders are working to strengthen sustainable practices, especially as the country aims to increase its biodiesel program to B50 by 2026. The B50 refers to the policy of increasing the palm oil blend in Indonesia’s biodiesel to 50 percent.

Gapki supports the new administration under President Prabowo Subianto in advancing policies that sustain the global competitiveness of Indonesia’s palm oil sector, which generated over $17 billion in export revenue by August 2024.

By August, Indonesia’s palm oil production reached 34.7 million tons, with exports, including biodiesel and oleochemicals, totaling over 20.1 million tons. However, Eddy said, “This performance is lower than the same period last year, with 2023 production at 36.2 million tons, exports at 21.9 million tons, and export value exceeding $20.59 billion.”

He cautioned that domestic replanting programs must accelerate and that international advocacy for fair trade is essential, as regulations like the EUDR could impose significant economic burdens.

The 20th Indonesian Palm Oil Conference (IPOC) in Bali this week is set to tackle these challenges, with industry leaders discussing strategies to navigate global uncertainties and strengthen Indonesia’s role as a key player in renewable energy and food production.

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Tags: Indonesia, European Commission, GAPKI, palm oil, deforestation, Indonesian Palm Oil Association, demand, EUDR, European Union Deforestation Regulation