For Indonesian smallholders, EU deforestation rule is a threat — and an opportunity

JAKARTA — New palm oil regulations being adopted by the European Union and the U.K. could put even more pressure on independent small farmers in Indonesia who are already struggling to meet sustainability requirements, new research suggests.

Smallholder advocates say there needs to be greater support to help these farmers join the deforestation-free supply chain and avoid a vicious cycle of unsustainable production.

Of chief concern to smallholders is a regulation set to be adopted by the EU in the coming months that will ban the trade in commodities like palm oil that come from illegal sources and deforestation. Small farmers in Indonesia, who manage 6.72 million hectares (16.6 million acres) of oil palm plantations, simply aren’t ready for the regulation, according to researchers from Indonesian environmental NGO Madani.

The researchers conducted a survey of independent smallholders in four palm oil-producing districts in the country — Rokan Hulu in Riau province and Tanjung Jabung Barat  in Jambi province, both on the island of Sumatra, and Ketapang in West Kalimantan province and Kotawaringin Timur in Central Kalimantan province, on the island of Borneo.

Looking at the aspects of legality, good agricultural practices, environmental management, and transparency and traceability, the survey found that only smallholders in Tanjung Jabung Barat are ready to comply with the EU deforestation regulation.

The researchers identified traceability as the biggest challenge for independent smallholders to overcome in complying with the regulation. This is because of the largely undocumented nature of transactions: according to the survey, only 0.17% of respondents were able to sell their palm fruit to mills directly or through cooperatives. The rest had to rely on an informal network of intermediaries and middlemen, making it difficult to trace the palm oil back to its origin.

This problem was compounded by a lack of documentation of transactions, with only 12.82% of respondents keeping sales records of every transaction.

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