Palm oil producing countries should remain calm and optimistic next year, and not get nervous about facing the European Union Deforestation Regulation (EUDR) that will be enforced in 2025, said the Council of Palm Oil Producing Countries (CPOPC).
Its secretary general Dr Rizal Affandi Lukman said the council stands ready in communicating all of the preparation under the joint task force which focuses on five work streams, namely ensuring the inclusion of smallholders in the supply chain, recognition of the national certification schemes (Malaysian Sustainable Palm Oil and Indonesian Sustainable Palm Oil), establishment of traceability tools, country benchmarking, and protection of privacy data.
“We don’t have to be nervous in approaching this because under the joint task force, the CPOPC stands ready in communicating all this preparation.
“So just be confident that we can pass through all the preparation smoothly next year once the EUDR is implemented,” he told the media after presenting a round-table discussion titled "How CPOPC views the Challenges and Opportunities of Palm Oil Industry in 2024" at the Royale Chulan hotel.
The EU announced the EUDR on Dec 6, 2022, stating that the regulation aimed to prevent deforestation due to agricultural activities.
Deputy Prime Minister Datuk Seri Fadillah Yusof, who is now the energy transition and public utilities minister, said previously the regulation’s implementation is based on unsound reasoning and had a weak scientific basis.
The former plantation and commodities minister had formed a mutual agreement with Indonesia’s Coordinating Minister for Economic Affairs Dr Airlangga Hartarto to protect the interests of the palm oil sector by strengthening efforts in dealing with the discrimination against the industry.
Earlier in May, Fadillah and Airlangga together went on a joint mission to the EU to defend the palm oil industry, and following the mission, they established an ad hoc task force to find solutions to compel the EU to consider the views of producing countries, and discuss the effects of the regulations on the countries, particularly smallholders, and the guidelines on the implementation.
Meanwhile, CPOPC deputy secretary general Datuk Nageeb Wahab said he acknowledges that 2024 is going to be challenging, but the council is going to focus on the joint task force addressing the issues resulting from the EUDR.
“We also expect the new legislation on forced labor besides the EUDR to come out,” he said.
Nageeb said the CPOPC organized the Sustainable Vegetable Oil Conference in Bali, Indonesia in November 2022, and in Mumbai, India in September 2023, in order to embrace the world’s main vegetable oil. The CPOPC plans to organize the third Sustainable Vegetable Oils Conference in the Netherlands in September next year to discuss sustainability standards within different vegetable oils, among others.
“This conference can get the attention of the European media as by that time, the EUDR will be implemented within three months,” he added.
CPOPC sustainability and smallholder director Citrasena Darmosarkoro said palm oil producing countries are expected to collaborate on a stronger, visible and effective response in communicating about the palm oil industry to the world.
It was reported that the CPOPC aims to have 93% of the world’s palm oil producing countries as members by next year, and countries such as Thailand, Papua New Guinea, Colombia, Ghana, and Nigeria are expected to be on board by then.
CPOPC strategy and policy director Puah Chiew Wei said that although 2024 will be a challenging year, it will create a lot of opportunities and peace for the vegetable oil industry.
“Palm oil can support food security, as it can be used for food ingredients such as bakery, chocolate, etc, and also can boost energy security, as palm oil can be used as a source of biodiesel and sustainable aviation fuel,” she said.
She noted that the production of palm oil is going to be on a declining trend, mainly because of the uncertainties in weather conditions, such as the El Niño and ageing plants both in Malaysia and Indonesia.
“Of course, global geopolitical tensions, such as from the Ukraine-Russia conflict and also Palestine-Israel, are going to create some sentiments, which are going to impact the global economic situation and also the purchasing power of consumers, indirectly impacting food security and prices,” she said.
In the context of the EUDR, she said that at this point in time, even the European Commission cannot provide information related to how to implement the EUDR’s requirements.
“We are still awaiting the application of the implementing act, and as of today, we still do not have competent authority from each EU member state who are going to implement the EUDR requirements.
“This competent authority will do due diligence process in every member state with regard to the implementation of the EUDR,” she said, adding that it indirectly may create an opportunity for the joint task force to put forward what they want to be incorporated in the EUDR implementing regulations.
Industry experts forecast Malaysia’s crude palm oil to trade between RM4,000 and RM4,200 per tonne next year, down from RM4,900 per tonne recorded in 2022, impacted by weather developments, geopolitical risks, government policies and slower global economic growth.