APINDOSU VICE CHAIRMAN USLI SARSI : INDONESIA CAPABLE OF HANDLING THE IMPACTS OF EU DEFORESTATION
31 May 2023
Since May 16, 2023, European Union (EU) countries have officially implemented the European Union Deforestation Regulation (EUDR).
There are 7 commodities that all EU member states are required to trade in deforestation-free imports: palm oil, coffee, rubber, timber, cocoa, meat, and soybeans, along with their derivative products.
Deputy Chairman of the North Sumatra Indonesian Entrepreneurs Association (Apindosu) in charge of plantations and agriculture Usli Sarsi, contacted by telephone, Saturday (5/27) said the policy implemented by the EU will have an impact on the export of crude palm oil (CPO) and its derivatives to EU countries.
North Sumatra (North Sumatra) is said to be one of the CPO and its derivatives producing regions in Indonesia. Referring to data from the North Sumatra Central Statistics Agency (BPS) in 2022, the value of North Sumatra's exports to the European Union (fob USD) was around 12 percent of North Sumatra's total exports from palm oil, rubber, coffee, cocoa and wood which are superior commodities.
If North Sumatra leading export commodities do not pass the test, the loss of revenue is around 12 percent.
That does not include its derivative products. One of the leading commodities that has the largest exports to the EU is palm oil and its derivatives.
The decline in palm oil exports to EU countries will have an impact on the decline in CPO prices in the global market. It will also automatically have an impact on the decline in the price of palm oil FFB at the farm level.
Usli said that in reducing the impact of deforestation implemented by the EU, the government and private companies have anticipated by adding new export routes that can be diverted such as India, Pakistan, China, the Middle East and other countries.
“Market demand is still large for some commodities affected by this regulation,” Usli explained.
In addition, the domestic market can also still be an alternative with the implementation of B35 by the government and also downstream for several commodities.
If European countries need palm oil products for energy, Indonesia is one of them that can meet these needs. Meanwhile, other countries such as Africa, Brazil, China which are also palm oil producers are unable to meet Europe's needs.
Usli said, the Deforestation Law released by Europe is actually to protect European farmers from attacks on palm oil products such as CPO which is cheaper. But since the vegetable oil produced by European farmers cannot meet their domestic needs, let alone energy needs, the Deforestation Law will likely be relaxed further.