The European Union Regulation on Deforestation-free Products (EUDR), set to become enforceable from December 30, 2025, signifies a pivotal shift in the global trade of commodities, aiming to significantly curtail deforestation associated with products entering the EU market. Indonesia, recognized as a major player in the production and export of palm oil, rubber, and cocoa, encounters a dual scenario of substantial challenges and potential opportunities as it navigates the complexities of adhering to this regulation.
The EUDR’s core principle is due diligence, which places the responsibility on companies placing relevant products on the EU market or exporting them from the EU market. This means companies must assess risks in their supply chains and implement measures to mitigate any identified risks. The EUDR’s stringent requirements pertaining to traceability and the assurance of deforestation-free supply chains necessitate a comprehensive overhaul of existing practices, particularly for smallholder farmers who form the backbone of these industries. It’s crucial to clarify that the term “compliance” under the EUDR specifically refers to the obligations of operators and traders placing products on the EU market and their adherence to local laws. Smallholder farmers, while not directly required to be “compliant,” may be asked to provide information like geolocation data or ensure they do not convert forest land.
This technical brief, drawing insights from the Cross Sector FGD Technical convened on July 23, 2024 and incorporating input from the Regional Technical Dialogue convened on September 5, 2024, delves into the multifaceted implications of the EUDR on Indonesia’s agricultural landscape. It provides a nuanced understanding of the challenges specifically faced by independent small-scale farmers grappling with compliance costs to larger traders navigating the clarity over the compliance in general as December 2024 is nearing.
