The EUDR was initially set for formal implementation on 31 December 2024, but the European Commission (EC) recently announced a proposal for this to be postponed by 12 months to 30 December 2025, citing ‘feedback from international partners’ as its main reason amidst both intense internal and external pressures.
Thank you for reading this post, don't forget to subscribe!The EC also released a 48-page long guidance document for EUDR implementation in response to longstanding criticism by many producer markets regarding a lack of clarity – but according to the Malaysian Palm Oil Council (MPOC), many crucial points still remain unclear.
“From the beginning, Malaysia has had three main demands with regard to EUDR in order to ensure that it is viable here: That smallholder farmers be exempted; that the Malaysian Sustainable Palm Oil (MSPO) standards be accepted and recognised; and that Malaysia be accepted as a low-risk country in EUDR’s planned benchmarking system given all our work in sustainability,” MPOC CEO Belvinder Kaur Sron told FoodNavigator-Asia after taking the stage at the recent Malaysian Palm Oil Forum in Kuala Lumpur, Malaysia.
“In particular benchmarking is considered to be an important process as part of the EUDR, but after two years we still do not have information on the criteria being set for this – we’ve heard first that all countries will be medium-risk, then that all will start as low-risk, but till date we don’t really know what has been decided.
“Being low-risk will mean that the process of due diligence, and thus trade, is greatly simplified, and checks by the competent authorities will be far reduced to 1% as opposed to 3% for medium-risk and 9% for high-risk – so it is clear that we need this to be more transparent and it is not a good sign that we have no idea what is happening at the EU level.”
She also questioned the reason for the EU’s lack of communication with its partner countries, and its expectations regarding potential additional costs – as well as who exactly will be expected to shoulder these.
“The three basic questions regarding cost are how much it will be, is this justifiable, and who will pay,” she said.
“For palm oil, estimates have placed this cost at hundreds of thousands of dollars or billions of ringgit, all of this is expected to all on the smallholders – and the question remains, is this fair?”
Who will pay?
According to PwC Belgium Management Consulting and industry consultant Jelmen Haaze, the EU has agreed to make ‘more funds available’, but that not much official information is yet available now given the lack of clarity.
“At the end of the day, it is supposed to be the EU companies or operators that are supposed to have the major operational liability, and make the choice on who and where to buy vegetable oil entering the EU,” he told the floor.
“We know they need to appoint compliance officers who can be criminally prosecuted in the event the due diligence process is circumvented, but at this point we don’t know what a lack of compliance means for the palm oil industry, e.g. does it mean sustainable palm oil will be more premium, or will it lose market access? We don’t know yet.
“We also don’t know the specific benchmarking criteria yet so can only advise all producers to get the polygones and geolocation information ready, and for smallholders to get organised as well.
“One thing we do know is that the EU has promised to make more funds available as part of EUDR – the support to be provided is likely to be a combination of financial aid and capacity building, but the key element remains how to get this support to the ground.
“One can provide and offer the support but delivering this to the players, especially smallholders, is the real challenge, which is also why we urge smallholders to get better organised so that any assistance will be able to reach them more quickly and efficiently.
“There is also a very strong need for all of this to be a join government and industry effort, not just from a financial perspective but also an implementation perspective as the smallholders are not going to be able to do it alone.”
