Support smallholders to ensure that EUDR & CSDDD protect forests

While the European Commission has listened very well to the corporate calls to cut red tape in the EUDR and CSDDD, the call for smallholder support has been largely ignored. In the preamble to the EUDR, the EC recognizes the importance of responsible procurement to support smallholders: “When sourcing products, reasonable efforts should be undertaken to ensure that a fair price is paid to producers, in particular smallholders, so as to enable a living income and effectively address poverty as a root cause of deforestation.”

However, in practice we see that the EUDR has strengthened the tendency of importers to impose top-down sustainability requirements on growers, both large and small. Smallholders are often ill-equipped to comply. As one anonymous palm oil processor stated in an interview for the Palm Oil Barometer: “Buyers constantly stress that materials must be delivered in accordance with NDPE-requirements, but smallholder inclusion and reward for sustainable performance are not deal-breakers for them.”

To truly uphold the UN’s guiding principle of “leaving no one behind” and to prevent further marginalization of smallholders from the EU, the Commission and Member States must ensure that implementation of the EUDR actively promotes smallholder inclusion. This requires targeted support, particularly in addressing traceability—an area where smallholders face structural barriers.

Palm oil is a staple food, an economic factor and a political issue. Millions of smallholders in Asia, Africa, and Latin America depend on its cultivation. Yet under the current trajectory of the EUDR and CSDDD, they risk exclusion from EU markets—because current systems fail to recognize their realities.

Regulations from consumer countries profoundly influence the conditions under which production occurs. Although sustainably produced palm oil can significantly contribute to resilient rural livelihoods, smallholders remain in a vulnerable position. The 2025 Palm Oil Barometer highlights the core issue: an inequitable distribution of value across the supply chain. Smallholders receive only a fraction of the profits. Without living income, access to finance, technical support, or secure land rights, many smallholders cannot afford to invest in sustainable practices, leaving them exposed to climate shocks and price volatility. This forces farmers to resort to unsustainable practices to maintain their livelihoods, which results in environmental degradation.

The situation is especially dire for independent smallholders, whose supply chains are often informal and poorly documented. This lack of traceability poses a critical risk: under the EUDR, they may be excluded not because they are unsustainable, but because they are invisible to regulatory systems.

The CSDDD, in its original form, could have counterbalanced these risks—by embedding human rights, fair treatment of suppliers, and environmental stewardship into corporate due diligence. However, the Commission’s latest proposal significantly weakens this potential. Together with 40 other CSOs, Solidaridad warned that the revised CSDDD deprioritizes key safeguards and proposes a series of deregulation measures that would hurt the interests of millions of smallholders.

For example, the EC proposes in its Omnibus package to remove the obligation for responsible termination of a business relationship as a last resort (Article 4(5) and (6)). Smallholders are oftentimes considered high-risk suppliers by companies in scope, and therefore over-exposed to cut-and-run practices. If the CSDDD does not require disengagement to be responsible and used as a last resort, companies may cut ties/terminate their business relationships prematurely, threatening smallholders’ livelihoods and market access. Further, this article is coupled with the proposal in Article 4(7) to remove the obligation for stakeholder consultation during disengagement. This would make it impossible for smallholders to voice their concerns about the adverse consequences of termination or even suspension of contracts with their buyers.

The EUDR and CSDDD are the crowning achievement of the previous European Commission’s efforts at creating a more sustainable world. It’s a first step towards an empowered due diligence framework that could transform the way we do business. Implemented well, it can be used to support our partners across the world in their own efforts to curb environmental destruction.

The Team Europe Initiative on Deforestation-free Value Chains is an important first step from EU Member States like the Netherlands and Germany. But it is insufficient for truly living up to EUDR article 30 on Cooperation with third countries and the promise to protect and restore the world’s forests.

When it comes to palm oil, we can only reiterate our recommendations from years ago. EU institutions and Member States must take immediate action on the provisions of Article 30 of the Regulation:

• Support national sustainability schemes, such as ISPO and MSPO, including investments in training, land title registration, and landscape-level governance to strengthen smallholder inclusion and traceability.
• Provide support for modern and easy-to-use technology and end-to-end traceability systems to help smallholders map plots and determine geolocation, and meet EUDR compliance requirements.
• Identify practical solutions on how to share traceability data along the supply chain that are consistent with personal data privacy protection legislation in certain producing countries.
• Develop innovative financial mechanisms that compensate local communities for conserving forests and choosing not to convert land to oil palm—while fully respecting indigenous and customary land rights.
• Support livelihood transitions by funding alternatives for smallholders in high deforestation-risk areas who seek to move away from palm oil cultivation.
• Prevent smallholder exclusion by establishing EU-level mechanisms to safeguard sourcing from independent smallholders—including preferential sourcing models and structural support to help them remain in regulated supply chains.

With the EU Deforestation Regulation set to take effect next year, additional measures are urgently needed to uphold human rights and strengthen the position of smallholder farmers. This is essential for building stable, sustainable, and resilient global supply chains.

The Palm Oil Barometer 2025 outlines concrete recommendations for companies, policymakers, multistakeholder initiatives, and the financial sector. It offers a clear path forward to strengthen smallholder inclusion and build a more resilient palm oil industry. Because only when all actors take shared responsibility, we can meaningfully improve smallholder livelihoods and protect the world’s remaining forests.

Tags: palm oil, deforestation, Africa, Latin America, Sustainability, smallholders, EUDR, Asia, CSDDD, Production, European Commission