MALAYSIA and Indonesia are gearing up for a two-day joint mission to Brussels from May 30 for talks on recent developments in the European Union (EU), particularly the EU Deforestation Regulation (EUDR) that is negatively impacting the palm oil industry.
Besides the two countries, Honduras has committed to joining the mission, said Deputy Prime Minister Fadillah Yusof, who is also plantation and commodities minister.
“The mission is to engage with the European Commission because, despite all the initiatives by Malaysia and Indonesia in terms of taking care of the environment, the palm oil industry is still facing challenges imposed by the EU,” he told reporters after chairing the Council of Palm Oil Producing Countries’ (CPOPC) ministerial meeting in Kuala Lumpur today.
Fadillah said the world’s two largest palm oil producers comply with global best practices.
“We want to send a strong message that palm oil has actually contributed a lot … in compliance with the United Nations’ Sustainable Development Goals – that is, to address the issue of poverty, which is something we have achieved.
“Action taken by the EU without negotiation and without engaging with us will definitely impact smallholders,” he said.
Malaysia and Indonesia will also look at other legislation being deliberated by the EU, such as the Forced Labour Regulation, Green Claims Directive, and Renewable Energy Directive II, which require the attention of stakeholders in the palm oil industry.
For the Malaysian market, the EU accounts for 9.4% of Malaysia’s export volume (1.47 million tonnes) of palm oil.
“It is a significant amount, with some companies having established refineries in Europe. Thus, the EUDR, which can be considered a trade barrier, will directly impact operations and businesses in the long run,” Fadillah said.
He said Malaysia and Indonesia hope the EU will recognise the Malaysian Sustainable Palm Oil and Indonesian Sustainable Palm Oil standards.
Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto, who was also present, said: “You (the EU) cannot impose your standard and say your standard is superior to others.”
Airlangga said palm oil has proven to be an essential item to ensure food security, especially amid the Russia-Ukraine war, as the commodity provides an alternative in the food supply chain.
Fadillah said the CPOPC may look into the possibility of collaborating with the private sector to invest in developing technologies to help smallholders to lower production costs and grow income levels, among others.
He said smallholders play a significant role in the palm oil industry. In Malaysia alone, there are about 450,000 smallholders, so the government needs to ensure their livelihood is protected, he said.
“Smallholders account for about 40% of global palm oil production. Hence, it is our duty not only to protect them, but also empower them with the right knowledge and tools,” he said.
Fadillah said the Plantation and Commodities Ministry expects crude palm oil (CPO) futures to remain strong for the remainder of the year, noting that CPO is currently trading at a good price and demand for palm oil is expected to grow. – Bernama, May 17, 2023.