- EU Member States and MEPs are leading opposition to EUDR implementation;
- European industry called out the Commission for lack of understanding of supply chains;
- Both are in line with the criticisms that exporting countries have been voicing for several years;
- The New York Times has published two pieces on palm oil over the past month, calling out Indonesia’s exports to the US and the future of the US FOREST Act;
- But there are some clear protectionist plays at work in the proposed legislation
EU MEPs, states and industry finally see EUDR risks
Emerging opposition of EU Member States to the EUDR is causing more headaches for the EU as its approaches its election season in June.
Agriculture ministers from 20 EU countries called for a delay to the implementation of the EUDR. This was initially led by ministers from six countries: Austria, Finland, Italy, Poland, Slovenia and Sweden. Their core concerns are around timber and cattle industries, and the specific geolocation requirements for each, as well as the problems associated with traceability through the supply chain.
At the same time, German MEPs — including the chair of the Agriculture Committee Norbert Lins — have been calling on EU Commission President von der Leyen to: delay implementation for two years and give a complete documentation exclusion for small farmers. Austria’s forestry minister is also calling for a complete exemption for Austria.
Add to this a broad letter from a coalition of EU business groups including farmers and manufacturers, that has called out the Commission for a total lack of understanding of supply chains and the general absence of clear guidance on the EUDR. The letter states:
“Operators and traders are working hard to prepare their supply chains and adapt their systems and due diligence processes for compliance with the EUDR. They try to develop workable solutions, compatible with the EUDR provisions, but implying less administrative burden. However, these efforts are impeded by large gaps in information, lack of appropriate technical solutions and by misconceptions as to the functioning of our complex chains.”
The letter goes on to critique the regulation and the Commission for the inadequacy of the guidance provided so far, lack of clarification, and ongoing legal grey areas such as data protection.
This begs the question: if the EU can’t provide answers to its own farmers, foresters and industry on a serious regulation that is scheduled to come into force in less than nine months, what hope do exporting countries have? The next meeting of the Joint Task Force between Indonesia, Malaysia and the EU is tentatively scheduled for September this year, if it happens at all. Do palm exporters have to wait until then to have their questions answered?
It’s worth noting that the concerns of European operators have also been raised by Indonesia and other commodity exporting countries, but generally dismissed out of hand by EU officials and other boosters of the regulation.
Mighty Earth, for example, has called the concerns that have been raised by European ministers and industry as an attempt to “sabotage” the EUDR. This is far-fetched at best: genuine concerns about implementation and perverse outcomes — for smallholder farmers — are not sabotage.
Just a reminder of where this can lead. When Unilever pushed for 100 per cent traceability in its supply chain a decade ago, it had to cut 80 per cent of its smallholder suppliers. The Palm Oil Transparency Coalition — which includes WWF and FPP as members — indicated that a split in supply chains, where smallholders will be excluded from the EU market because of EUDR requirements is already occurring. This aligns with numerous conversations around the region.
If Mighty Earth and others want to make the perfect the enemy of the good, they need to be prepared to clean up afterwards.
NYT Swings on Palm, But Misses a Protectionist Play
The New York Times has published two pieces over the past month, with one exploring the impacts of the EUDR on palm livelihoods, and the second firing off a broad critique of the Indonesian sector.
The first piece puts forward many of the points that POM and others in the industry have been arguing for the best part of five years: the measure ignores the historical deforestation of wealthy countries, and cracks down on agricultural development in poorer countries; that deforestation from palm has slowed and in some cases stopped; that it will impose significant costs on smallholder farmers and exclude them from global supply chains; and that many aspects of compliance for operators have been ill-conceived and unworkable.
The second piece reads almost like an internal response to the first. Citing a new Global Witness report, the piece singles out palm oil from Indonesia as being the key contributor to “imported deforestation” in the United States in the years 2021 to 2023.
But it’s important to remember that the United States simply isn’t a big importer of agricultural commodities — and hence its imported deforestation footprint is actually very low. Why? Because the US is the largest producer of beef, soy and maize, which are the commodities that have the highest deforestation footprints globally. Its imported deforestation footprint is around one-tenth of China’s and around one-eighth of the EU’s.
The Global Witness report is very much oriented towards the revised US FOREST Act, which is a EUDR-style piece of legislation being pushed through Congress.
But NYT and Global Witness should be wary of the different agendas shaping the legislation. If the US imported deforestation footprint is so small, why bother having a complex piece of legislation that is unlikely to have significant impact on deforestation rates? Why not, as parts of the Biden administration have done, work with exporting countries to improve forest governance?
There’s dead giveaway in the legislation’s product lists: car tires. Car tires are the rubber product that is singled out by the legislation. No other manufactured rubber product is listed. And US tire manufacturers have always had a problem with imports, currently enjoying a high level of protection.
In other words, protectionist elements are at play. Consider also, for example, that the US recently re-opened imports to Brazilian exporters who have taken 25 per cent of the frozen beef import market within three years, and the US imported a record amount of beef from Brazil in 2022.
It’s very easy — and fashionable — for Global Witness and the NYT to point the finger at palm oil. But they should also be wary of simply being used as a pawn, and taking palm oil with it. Especially as the risks of introducing such legislation — such as a global segregation of supply chains or a deterioration of diplomatic ties with developing countries — are now becoming apparent.