Indonesia and Malaysia are determined not to lose the palm oil market in India, the biggest importer of the commodity, due to perceptions of their products being unsustainable.
Sustainability has become a crucial issue because palm oil plantations in Indonesia and Malaysia, the world's two largest crude palm oil (CPO) producers, have often faced allegations of deforestation. Both countries have requested the revocation of the European Union Deforestation Regulation (EUDR), which they believe has adverse effects on plantation products like palm oil and rubber. Currently, the EU, Malaysia, and Indonesia have formed a joint task force to discuss the fairness of the EUDR.
In recent times, negative campaigns against palm oil in India have intensified. Besides sustainability issues, there has been a growing campaign highlighting the alleged adverse health effects of CPO products among Indian consumers.
Last year, during a shortage of edible oil in Indonesia, the government imposed export restrictions to secure domestic supplies. This move surprised India, which heavily relies on Indonesia for palm oil supplies, with imports totaling 5 million tons in 2022.
However, the Indonesian government is not concerned about the potential of India to follow in the footsteps of the European Union (EU) in discriminating against Indonesian and Malaysian CPO products.
"The solidarity and friendship we have built with India, where we understand each other, is what matters. It's different from Western countries that are biased against Indonesian and Malaysian CPO," Deputy Trade Minister Jerry Sambuaga said at the 2nd Sustainable Vegetable Oil Conference held at the ITC Maratha Hotel in Mumbai, India, on Wednesday.
Last year, India started to produce its own CPO to build a strategic reserve. Jerry added that Indonesia would welcome India to the Council of Palm Oil Producing Countries (CPOPC).
“Why not?” he said.
The conference serves as a platform for Indonesia to convince countries worldwide that palm oil products adhere to sustainability standards, such as the Indonesia Sustainable Palm Oil (ISPO), the Malaysia Sustainable Palm Oil (MSPO), and the Roundtable on Sustainable Palm Oil (RSPO).
Previously, the Indonesian government sought support from the Netherlands and France regarding the removal of EUDR policies. This request was made by Indonesian Trade Minister Zulkifli Hasan after accompanying President Joko Widodo in bilateral meetings with Dutch Prime Minister Mark Rutte and French President Emmanuel Macron during the G-20 Summit in India.
Datuk Nageeb Wahab, Deputy Secretary-General of CPOPC, said that India's response to Indonesia and Malaysia's fight against European CPO discrimination has been neutral.
"India doesn't take sides with Europe or Indonesia or Malaysia... India is our biggest buyer, but negative perceptions of palm oil are growing," Datuk Nageeb said.
According to S&P Global Research, Indonesia and Malaysia account for about 30 percent of the world's annual edible oil production of around 220 million metric tons and more than half of the world's vegetable oil exports.
According to CPOPC Secretary-General Rizal Affandi Lukman, a ban on palm oil may jeopardize food security in times of uncertainty.
He said that for India, palm oil is meant to complement domestically produced vegetable oils, not compete with them, to ensure food security and energy security.
“Without a doubt, palm oil is a crucial feedstock in the renewable energy mix, with the potential to play a pivotal role in supporting the implementation of the Global Biofuel Alliance,” he said.
Shatadru Chattopadhayay, Managing Director of Solidaridad Asia, urges the EU for the inclusive implementation of the EUDR in three steps. First, a specific percentage of palm oil imports from smallholders in Indonesia and Malaysia should be guaranteed. Second, support palm oil smallholders by providing a guaranteed market for carbon credits.
"Third, aligning national mandatory sustainability standards like the Malaysian Sustainable Palm Oil (MSPO) and the Indonesian Sustainable Palm Oil (ISPO) with the EUDR," Shatadru said.
Read more at Jakarta Globe