Indonesia and Malaysia, the world’s two largest palm oil producers, have voiced their strong opposition to an EU plan to stop considering palm oil-based biodiesel a renewable fuel by 2021.

Indonesian Foreign Affaird Minister Retno LP Marsudi said the country was “disappointed” with the decision and considered it to be “discriminative”, Jakarta Post reported on 19 January.

She added that Indonesia planned to engage in talks with the EU and present data about the Indonesia Sustainable Palm Oil (ISPO) programme, alongside figures of how palm oil had helped “millions of people” escape from poverty through sustainable farming.

“The ISPO is one of Indonesia's ways to achieve Sustainable Development Goals (SDGs). That is what [the EU] does not see. We are talking about the lives of millions of people who depend on oil palm plantations for their living," said Marsudi.

Malaysia’s Minister of Plantation Industries and Commodities Mah Siew Keong also described the EU plan as discriminatory and said Malaysia’s ambassadors to the 27 EU member states would raise objections.

“This vote is very disappointing. It’s a black day for free trade,” Mah told the Bangkok Post on 19 January.

“The government will not tolerate the denigration of the palm oil industry and will ensure Malaysia gives a fitting response to those who harm the palm oil industry,” he added.

Malaysian state of Sarawak’s government said it would subsidise its palm oil farmers in order to help them diversify their crops if the EU’s “unfortunate” plan went through, the Malay Mail Online reported on 19 January.

“For example, within a family of smallholders, they can rear goats or cattle or fruit crops like pineapple and durian for eligibility to apply for a subsidy,” Deputy Chief Minister Datuk Amar Douglas Uggah Embas said.

“The diversification strategy had worked well some years ago when the price of rubber went down. There was a pepper crop to cushion the impact of the drop in rubber price,” he added.

The European Parliament voted on 17 January in favour of a proposal that would remove palm oil-based biodiesel from its list of renewable fuels by 2021 and freeze crop-based biofuels at levels reached in 2017.

However, the decision is not immediately effective. A final rule will depend on the outcome of upcoming tripartite negotiations between the European Parliament, Commission and the Council of Ministers.