Palm oil EUDR readiness summary
- Palm oil shows progress but remains unprepared for EU deforestation regulation
- Delays allowed better understanding certifications traceability systems supporting partial eudr readiness
- National schemes like ISPO and MSPO alongside rspo aid compliance
- Smallholder farmers face biggest hurdles from intermediaries geolocation and land tenure
- Uncertainty around implementation review documentation burden and data security persists
Two years ago, companies were preparing for the European Union Deforestation Regulation (EUDR), which was slated to be implemented in December of that year.
Two year-long delays later, they’re still essentially in the same position. It seems that the regulation has been “on the horizon” for a very long time.
Affected sectors are, therefore, still preparing for when the landmark regulation eventually comes into force.
Yet in other ways, a lot has changed since that first delay. Many sectors have spent the extra time improving both their their understanding of the regulation and their readiness for compliance.
How ready is palm oil – an ingredient widely considered to be the world’s most controversial? Having long been tied to deforestation, prompting industry backlash and an influx of “palm-oil free claims”, there’s a lot riding on EUDR compliance. Are food manufacturers’ supply chains in order?
Readiness: Palm oil’s strongest areas
Like those of many other EUDR-relevant commodities, palm oil supply chains are complex. Yet there are a number of factors improving the sector’s chance of compliance.
Many producers are already operating under regulatory frameworks that may support aspects of EUDR compliance.
There is a strong presence in producing countries of regulated sustainability certification systems, explains says a spokesperson for the Council of Palm Oil Producing Countries (CPOPC),
These include the Indonesian Sustainable Palm Oil (ISPO) and Malaysian Sustainable Palm Oil (MSPO).
These are often complemented by international voluntary schemes, like the Roundtable on Sustainable Palm Oil (RSPO). The EU accepts that information gathered from such voluntary certification schemes can help companies on the way to compliance. Nevertheless, this cannot act as a substitute for compliance through official channels.
“Member Countries have indicated that such systems may provide a useful starting point for demonstrating legal production status and, where relevant, practices predating the EU cut-off date,” says the CPOPC spokesperson.
Since the first delay at the end of 2024, member countries have continued their efforts to improve traceability systems, databases, and other compliance-supporting mechanisms.
Which areas need the most work?
As is the case with coffee, smallholder readiness remains the largest barrier to EUDR compliance for palm oil.
That’s because smallholder farmers often sell their fresh fruit bunches to intermediaries rather than companies, which limits their knowledge of the eventual destinations of the commodity and, most importantly, the applicability of downstream requirements like the EUDR.
Limited access to geolocation tools in remote areas continues to be a problem, as does unresolved land ownership and boundary documentation issues.
According to CPOPC’s member countries, these challenges have the potential to affect traceability, as well as the ability of operators to complete due diligence requirements.
Concerns remain that smallholders could be excluded from palm oil supply chains if these issues are not addressed.
Other barriers to compliance remain as well, including uncertainty around implementation details, as well as the scale of documentation required for each shipment.
The upcoming EUDR simplification review due later this month, and its potential implications, also looms large, fuelling further uncertainty.
Finally, producer countries have conveyed concerns around data security according to their prevailing laws and regulations, explains the CPOPC spokesperson.
Those who must comply to the regulation – producers and manufacturers alike – have only a few months to go before the EUDR comes into force. They must be ready.