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Indonesia’s palm oil smallholders’ union has welcomed the European Union (EU)’s new deforestation law but says farmers would need help to comply, Eco Business reported.

The new regulation gives forest-risk commodities including palm oil, beef, wood, cocoa and soyabeans 18 months to comply with rules that require producers to prove that their crops were not grown illegally or linked to deforestation.

Indonesia and Malaysia – which combined produce 85% of the world’s palm oil – have denounced the law, claiming it would impoverish millions of smallholders, according to the 25 January report. The two countries have also threatened to stop all palm oil exports to Europe.

However, Indonesia’s Palm Oil Farmers Union (SPKS) dismissed these threats as “excessive”, saying it welcomed the EU’s new law as it proposes financial and technical support for small farmers to grow sustainably, promotes a living wage for farmers, and pushes for improved traceability systems.

A key requirement of the new law is for farmers to provide geographical data tracing palm oil fruit back to the farm where it was grown, according to the report.

In a poll conducted by non-profit organisation Madani, reported by Mongabay on 4 January, smallholder farmers said they feared they would be unable to comply with the EU’s traceability rules due to the informal methods used in palm oil transactions.

Aida Greenbury, senior sustainability advisor to SPKS, was quoted as saying smallholders needed more support from large palm oil companies’ corporate social responsibility funds or profits, or from governments and donors, to meet the law’s requirements, which include establishing reliable traceability methods.

According to Ruben Brunsveld, deputy director, Europe Middle East and Africa, for the Roundtable on Sustainable Palm Oil (RSPO), companies should have enough time to implement the requirements – and this included helping smallholders comply with the rules.

“[Companies] need every part of their supply chain to be able to pass [traceability] data all the way down to smallholder farmers in rural areas of Indonesia, Malaysia and other grower countries,” Brunsveld was quoted as saying.

“That will require time, energy and money from companies to invest in their supply chains. They have 18 months to do that. But technically everything is possible. We need to keep smallholders in the ecosystem and connected to the European market.”

RSPO members were already required to provide full traceability to the mill level, he said.

Globally only 20% of the palm oil trade is RSPO-certified, according to the Eco Business report, and Europe is the biggest market for RSPO-certified palm oil.

Brunsveld added that “misunderstandings on both sides of the aisle” had led to tension between Europe and Southeast Asia over the environmental impact of palm oil, and these differences needed to be resolved for the EU’s law to be effective.

“In Europe, there hasn’t been enough recognition of the large strides that have been made [to reduce deforestation by the palm oil trade] over the last five to 10 years. In Asia, it’s perceived that Europe wants to implement a market-driven ban on palm oil,” he said.

“Malaysia and Indonesia, and the European Commission, need to work together to finalise this legislation.”