A reality check on the EU deforestation proposal

Two weeks ago, while Brussels-based policymakers were preparing for the next round of trilogue discussions on the deforestation regulation on November 9th, I was in Nigeria to facilitate a training on community outreach for sustainable palm oil. After months of underlining that a hasty implementation of the regulation is a threat to smallholders, I came face to face with the reality of their lives on the ground. The smallholders that I had advocated for now had a face, a name and a voice. As their voices grew louder, one famous quote kept coming to mind:

“In theory there is no difference between theory and practice, in practice there is.”

The goal of the European Commission’s proposal is to eliminate the European Union’s (EU) contribution to global deforestation. A goal that should be applauded because of Europe’s influence to move the global market towards sustainability. To date, with 45% of global consumption, Europe is the world’s biggest consumer of certified sustainable palm oil.? This creates leverage. But now, a hasty agreement due to political considerations is threatening this leverage and can potentially harm the most vulnerable people in the palm oil value chain: smallholders in producing countries.? RSPO estimates that there are more than 7 million smallholders in the global palm oil supply chain. Their production accounts for 40% of the total palm oil production area in Asia and up to 70% in West Africa. Therefore, it is critical that the theory of the proposal in Brussels be relevant to the reality of farmers and their families on the ground.?

So what is the reality?

The reality is that although global warming, climate change and deforestation have a direct impact on smallholder farmers in producing countries, these topics are usually not top of mind for a person who is living day-to-day. These smallholders are concerned with yields that have to be high enough to put food on the table and their children in school. Explaining to a smallholder deep in the countryside of? Nigeria, Papua New Guinea or Indonesia why she has to provide the geo-coordinates of the plot of land behind her shed (and how to do this) takes time. Even if you disregard that Nigeria still has strong tribal traditions; Papua New Guinea knows over 800 distinct languages and Indonesia stretches from Ireland to Kazakhstan. Just getting to speak to the farmers can be difficult, if you are not allowed to do so without the explicit permission of the village Chief. And what if he only grants you this access if you buy him a new car? These were the discussions we were having with the growers and farmers in Nigeria. This is the reality that EU policymakers need to understand and create time for.

I am not advocating to allow unsustainable practices or corruption to persist. I am saying that the gap between what we wish the supply chain would look like and what it in many places still is, is larger than can be seen from the top of the Berlaymont in Brussels.

Can we bridge the gap?

Getting smallholders to be compliant with the EU regulation will rely to a large degree on the support of other companies in the value chain, NGOs, mills and regulators.? The good news is that a lot of work is already being done. The RSPO’s Community Outreach Programme in Nigeria that was launched last week is one of six such programmes globally to involve civil society, growers, smallholders and local communities in the production of sustainable palm oil. Members of the RSPO are doing great work to help smallholders attain RSPO certification and European Processors & Traders are working hard to improve the traceability and transparency in their supply chains.?

But at the current speed with which the negotiations are proceeding, the due diligence requirements on companies could become binding by the beginning of 2024. This is too early to equip farmers, train them and set up all necessary prerequisites for data traceability. The result will be that European companies see themselves forced to eliminate all risks from their supply chain; i.e. to cut out the smallholders and only supply from (vertically integrated) large producers. If the smallholder is lucky enough to still sell his or her products, it will be to a market with lower sustainability criteria and lower prices. This means they will pay, quite literally, the price for Europe’s clean supply chain.

What needs to be done?

The proposal should be strengthened to prevent deforestation-leakage to other markets that have lower social and environmental standards and ensure that the EU does not cause harm to people in the process. No country or region should achieve its ecological ideals at the expense of the most vulnerable people in the supply chain. On the contrary, these goals can only be achieved if they are rooted in and supported by local communities and farmers on the ground.

That is why the RSPO urges the European Parliament, the Council and the Commission in the next round of their negotiations on November 9th to agree to the following:??

• An early impact assessment of the effect of the regulation on smallholder farmers (preferably prior coming into force but no later than 2 years after)
• An extension of the implementation period for companies from 12 to 18 months after coming into force.
• Introduction of commodity-specific guidelines and the moving of the geolocation requirements from the body of the text to these guidelines so they can address the specific issues the different commodities face in their supply chain.
• No widening of the scope to include palm oil and palm kernel oil derivatives, but the possibility should be examined in the first evaluation after 2 years.
• Only the first importer (operator) should declare due diligence; traders should be able to rely on the Chain of custody information.
• Stronger wording on the protection of human rights, where this is clearly linked to deforestation

If these points are agreed upon it will give companies the possibility to transform their supply chains without leaving anyone behind. For the EU this means the theory of compliance with a regulation, for smallholders this means the practice of another mouth fed or child in school.

Ruben Brunsveld

Dpt. Director EMEA / RSPO