EUDR is considered to be a hindrance to trade and a loss to farmers

The European Union's decision to implement anti-deforestation regulations has the potential to hamper trade and is considered to be detrimental to farmers. Farmers of several Indonesian export commodities are no exception, such as palm oil, rubber, coffee and cocoa.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in EUDR Dinilai Hambat Perdagangan dan Rugikan Petani

KOMPAS/HERU SRI KUMORO

Stacks of containers at the Tanjung Priok Port, North Jakarta, some time ago.

JAKARTA, KOMPAS — In addition to being considered discriminatory, the European Union's Deforestation Free Act or EUDR is considered to hinder trade. The regulation is also believed to have a direct impact on smallholders of oil palm, cocoa, coffee and other commodities in the country. In fact, these commodities can actually be a solution to the issue of deforestation which forms the basis of the EUDR.

Minister of Trade Zulkifli Hasan, Tuesday (1/8/2023), said that apart from trade competition between the United States and China and the impact of the Russia-Ukraine conflict, Indonesia faces challenges in the form of trade protectionism, among others related to environmental issues and climate change through the EUDR. The protectionism implemented by developed countries in the European Union is discriminatory, especially towards Indonesia's export commodities.

”This policy has the potential to be discriminatory, especially based on the criteria for high risk countries (high risk), we can be blacklisted (blacklisted). We also see this policy creating unnecessary trade barriers through due diligence obligations and sanctions for violations," he said in "FoodAgri Insight on Location: Against the European Union Anti-Deforestation Law" hosted by Indonesia's Ministry of Trade and CNBC.

As is known, the EUDR requires products exported or imported by the European Union to be free from deforestation or forest degradation. Currently, the regulation is entering a transition period and will be effective from January 2025.

Therefore, the government is currently seeking a middle ground so that when the regulation is implemented, no party will be disadvantaged. Zulkifli added that EUDR has a negative impact on Indonesian export products and harms farmers.

"We object and will take advantage of the 15th Indonesia-EU CEPA (Comprehensive Economic Partnership Agreement between Indonesia and the European Union) momentum in mid-July 2023 to clarify the rules and multi-interpreted anti-deforestation policies. The European Union is inconsistent, regarding coffee plants as damaging to the environment, but they also buy coal from us," he said.

Although not significant, according to Zulkifli, EUDR has a considerable impact on Indonesia's export performance. In 2022, Indonesia's export value to the European Union reached nearly US $7.2 billion, consisting of commodities such as palm oil, rubber, cocoa, coffee, and wood.

If agricultural products are not accommodated, of course this will cause social turmoil. That is, not alleviating poverty, but actually increasing poverty.

On the other hand, the policy will have a direct impact on commodity farmers such as palm oil, cocoa, and coffee. This is because there are 8 million small farmers involved in these commodities.

The Chairman of the Indonesian Palm Oil Entrepreneurs Association (Gapki), Eddy Martono, explained that the European Union's Renewable Energy Directive (EUDR) will mainly impact the farmers. This is because the Law Number 12 of 1992 concerning Plant Cultivation System allows farmers to plant any desired commodity.

"Farmers have no moratorium for palm oil because there is Law No. 12/1992 that frees them to grow any desired commodity. On the other hand, if agricultural products cannot be accommodated, it will certainly cause social turmoil. This means not eradicating poverty, but adding to poverty," he said.

Also read: IEU-CEPA Negotiations Will Be Tougher

Certificate

In addition, the EUDR policy also obliges farmers who own more than 4 hectares of land to perform geolocationor determine location coordinates for monitoring deforestation. This will certainly make it difficult for farmers.

According to Eddy, the certification of deforestation-free land mandated in the EUDR has actually been formulated in the Roundtable on Sustainable Palm Oil (RSPO) and Indonesian Sustainable Palm Oil (ISPO). However, RSPO, which is also a product made by the European Union, is not recognized in the EUDR.

KOMPAS/AGUSTINUS YOGA PRIMANTORO

Chairman of the Indonesian Palm Oil Entrepreneurs Association (Gapki), Eddy Martono, gave a statement in Jakarta on Tuesday (8/1/2023).

In 2020, the Central Bureau of Statistics reported that there were approximately 6.9 million farmers upstream and 16.2 million workers downstream. "All of them are not recognized by EUDR, including RSPO and ISPO. However, RSPO may be accepted as a reference because it was created earlier. Currently, it is being fought for by the government through the Indonesia-EU CEPA," said Eddy.

Chairman of the Socialization and Industry Department of the Indonesian Coffee Exporters Association (AEKI) Center Moelyono Soesilo added, coffee exporters have also participated in certification so that on average the coffee exported has been certified Common Good for Coffee Community. Related to the issue of deforestation, coffee cultivation is no longer encroaching on forest areas.

Impact

The implementation of the EUDR policy, said Moelyono, would actually affect the need for coffee imports in European Union countries. Overall, total coffee exports from Indonesia to the European Union reach 25 percent or 85,000 tons per year.

"They actually need us more than we need them considering there is no coffee producer over there. Furthermore, the European Union is not the only export destination, (there are others) such as Eastern Europe, the Middle East, and countries in Asia," he said.

KOMPAS/AGUSTINUS YOGA PRIMANTORO

Chairman of the Socialization and Industry Department of the Central Management Body of the Indonesian Coffee Exporters Association (AEKI), Moelyono Soesilo, provided an explanation about the impact of EUDR in Jakarta on Tuesday (1/8/2023).

Also read: Facing the EUDR, RI Prepares Litigation and Market Transfer Routes

Chairman of the Cocoa Association, Arif Zamroni, explained that some of the large multinational cocoa industry operates in Indonesia. The implementation of the EUDR will actually have an impact on chocolate business actors from the European Union as most of their raw materials are supplied by Indonesia.

The deforestation that is being campaigned in EUDR, according to Arif, is not related to cocoa plants. Because, so far, cocoa has never been planted by clearing forests.

"Chocolate (cocoa) is an intercrop plant and the second plant after trees. Therefore, cocoa needs shade trees, making cocoa a solution to deforestation. So, it is misguided to consider cocoa as contributing to deforestation," he said.