Malaysia’s palm oil lobby hails reprieve from EU deforestation law: ‘victory for common sense’

Source:  South China Morning Post
Malaysia’s leading palm oil lobby group expressed its approval of the European Union’s decision to postpone a strict deforestation law that it said threatened the economic viability of the industry, calling it a “victory for common sense” and a reprieve for small farmers of the commodity.
The EU Deforestation Regulation (EUDR) aims to ensure products consumed by its citizens do not contribute to global deforestation or forest degradation by banning the import of seven commodities – coffee, cocoa, soy, beef, rubber, wood, and palm oil – that are sourced from deforested areas.

The new rule will mandate paperwork to prove commodities can be traced to their original plot of land via satellite coordinates and maps. This documentation must be submitted before products or raw materials are exported to the EU market.

Originally scheduled to come into effect on December 30, the regulation has been postponed by twelve months to 2025 following a surprise announcement by the European Commission on Wednesday.
Malaysia and Indonesia, the two largest palm oil producers, vociferously opposed the law, arguing the original 2024 deadline was not feasible and put undue pressure on smallholders.

The Malaysian Palm Oil Council (MPOC), the main promotional and marketing vehicle of the commodity, used in everything from soaps to foods, said the delay was a “sensible and much-needed step”, providing relief for businesses that require additional time to prepare for compliance with the complex regulatory demands of the EUDR.

“This is a victory for common sense and a welcome relief for all of those businesses who highlighted the need for a delay,” its CEO Belvinder Sron said in a statement.

The European Union is the third-largest export market for both Malaysia and Indonesia, behind India and China.
Demand for palm oil has driven deforestation in Malaysia, with more than 12 million acres of rainforest converted into palm oil plantations between 2000 and 2012. This has decimated the habitat for endangered wild animals like the Malayan tiger, sun bears, and orangutans.

Sron said the delay allows global supply chains to adjust to the regulation’s technical and administrative requirements without risking trade disruptions, particularly for smallholder farmers.

A 2020 report by conservation scientist Serina Rahman at ISEAS Yusof Ishak Institute in Singapore found that 40 per cent of Malaysia’s palm oil output is produced by smallholders. More than 13 per cent of independent smallholders are family-run with poor social and environmental standards due to capital constraints, the report said.

These families’ incomes are about 1600 ringgit (US$377) per month, well below the new national poverty line of 2,208 ringgit (US$521).

Malaysia’s concern for the EUDR was raised by Prime Minister Anwar Ibrahim during his meeting with German President Frank-Walter Steinmeier in February, saying Malaysia has encountered difficulties in negotiating with the EU on the matter and called for a review of the European regulations in February.

“To do justice to this region, we have taken all the necessary measures, reforestation, including the peat soil areas, therefore they should allow us to function economically and not be so rigid,” Anwar said.

Previously his deputy Fadillah Yusof who is also Plantation and Commodities Minister said smallholders should be exempted from the regulations, saying it presents “a significant stumbling block”, which would ultimately lead to increased poverty and harm to rural communities.

“These actions are unjust and stand in stark contrast to the EU’s commitments outlined in the United Nations sustainable development goals,” he said in March 2023.

This came after more than 500 smallholders from Malaysia signed a petition urging the EU to review the EUDR, which it deemed discriminatory.

Representing the indigenous Dayak community in Sarawak, the Dayak Oil Palm Planters Association (DOPPA) said the EU failed to understand the processes involved in the Malaysian palm oil supply chain and refuses to recognise the existence of smallholders.

It has urged the EU to instead accept the existing Malaysian Sustainable Palm Oil (MSPO) certification “which is inclusive and has addressed all issues raised by the EU such as deforestation, child labour, and forced labour”.

The MSPO includes robust requirements for no deforestation, mandatory reporting, and auditing, which experts from the European Forest Institute described in a June report by the New Straits Times as “a world-class standard for agriculture.”

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