- The Indonesian government and its partners in the European Union are working to resolve differences in their forest and raw material supply chain data ahead of a deadline that could lead to Indonesian raw materials being excluded from the EU market.
- According to the EU Deforestation Regulation, commodities linked to deforestation will no longer be allowed to enter the EU market from next year. Indonesia is a major producer of four of the seven commodities listed: palm oil, coffee, cocoa and rubber.
- In order to be allowed to export these raw materials to the EU, producers and traders must be able to prove that the products do not come from land where forests have been cleared for cultivation. However, the forest maps used by Indonesia and the EU have some differences that need to be reconciled.
- The EU ambassador to Indonesia says his side is working with local authorities to resolve the issue. He attributes the issue to the different definition of “forest” used by European and Indonesian authorities.
JAKARTA — The Indonesian government is working to improve and synchronize its forest and supply chain data to meet increasingly stringent sustainability standards and requirements in export markets, including the European Union.
Earlier this year, the Indonesian government identified discrepancies between the forest map it used and the data used by the EU as a reference for the implementation of the EU Deforestation Regulation (EUDR).
The EUDR bans the import of seven forest-related commodities – soy, palm oil, coffee, cocoa, wood, rubber and beef – that are linked to deforestation and illegal trade. It requires producers and companies importing these commodities into the EU to provide detailed evidence that they were not produced on land deforested since 2020. The new rules give producers and companies until December 30, 2024 to fully comply with the rules.
To implement the EUDR, the EU uses forest data published on its Forest Observatory platform, which monitors changes in global forest cover and associated species.
The Indonesian government now has its own forest monitoring system called SIMONTANA. It also has its own definition and classification of forests and deforestation.
When comparing the maps of the EU Forest Observatory with those in SIMONTANA, the government found inconsistencies. The EU overestimated Indonesia’s forest cover. The government found that some bush and agricultural areas, such as oil palm plantations and coffee plantations, had been classified as forest cover by the EU.
These discrepancies could make it difficult for Indonesian producers to comply with the EUDR and export their products to the European market, said Aditya Bayunanda, CEO of WWF Indonesia.
“Putting the right map together could help us comply with the EUDR. Otherwise, there could be arguments (about whose data is correct) every time we deliver,” he told Mongabay in Jakarta in June.
These data discrepancies could also lead to the EU wrongly classifying Indonesia as a high-risk country, Indonesian Environment and Forestry Minister Siti Nurbaya Bakar said, according to state media.
The EUDR introduces a classification system that categorises exporting countries based on their deforestation risk. Low-risk countries will be subject to a simpler due diligence process, while higher-risk countries will be subject to more stringent checks. The checks will use geolocation coordinates, satellite monitoring tools and DNA analysis to trace the origin of products entering the EU.
There are fears that classifying Indonesia as a high-risk country would make it more difficult for producers in the country to export their goods to the EU. Indonesia is the world’s largest palm oil producer and a major exporter of wood, coffee, cocoa and rubber.
To resolve these differences, the Indonesian government is working with EU authorities, said Denis Chaibi, EU Ambassador to Indonesia.
“Yes, the government has contacted the EU and pointed out that the maps produced by our joint research center contain an error according to the Indonesian authorities,” he told reporters in Jakarta in June. “So we had a meeting yesterday to compare notes and maps, and I think there will be a follow-up meeting so that we can continue our work and make sure our data is close to each other.”
Chaibi said the discrepancies in the data were due to different definitions of forest adopted by the EU and the Indonesian government.
The EU uses the Food and Agriculture Organization of the United Nations (FAO) definition of forest, which Chaibi said is used by most people. However, the Indonesian government has its own definition.
“So we need to reduce the differences in our ideas about what constitutes a forest,” Chaibi said.
The looming year-end implementation deadline means both sides have less than six months to resolve their differences, he added.
“We are working hard to be able to transfer the data on January 1, when the implementation of the new regulation begins,” Chaibi said.
Traceability Dashboard
Another measure taken by the Indonesian government to make it easier for its manufacturers to prove that their products are deforestation-free is the development of a supply chain traceability system.
The system will take the form of an online dashboard and will be launched in September. It will collect and synchronize all data and maps on various commodities such as palm oil, coffee, cocoa and rubber at all stages of the supply chain.
The EUDR has drawn criticism from producing countries such as Indonesia, which have accused the bloc of treating their products unfairly on the European market. One of the most controversial aspects of the EUDR is the requirement for producers and traders to provide precise geographical coordinates of all the land from which their products originate.
The idea is that buyers in the EU can trace the origin of the products back to the farms where they were grown, ensuring that no forests are cut down to produce them.
However, full traceability of commodities such as palm oil in Indonesia is difficult due to various factors such as bureaucratic hurdles, overlapping land claims and lack of documentation of palm oil transactions.
For example, Indonesia does not have a mandatory traceability system for palm oil producers. Although it does have a mandatory standard for sustainable palm oil, ISPO, it does not have traceability requirements, although there are plans to include them in the next version of the standard.
However, the industry has largely taken it upon itself to develop a traceability system. However, these often only trace the product back to the processing plant where the palm kernels are pressed, not to the plantation where the kernels were grown. This gap is likely due to the lack of publicly available data on plantations, which the government largely keeps secret for privacy reasons.
The lack of traceability down to the plantation level is particularly true for farms run by independent smallholders, who produce up to 40 percent of Indonesia’s palm oil but often do not document their transactions and sell their palm fruit to an informal network of middlemen and intermediaries, making it particularly difficult to trace their supplies, said WWF’s Aditya.
Added to this is the problem of overlapping data on land ownership: different government agencies have different information on the size of oil palm plantations.
The new dashboard is intended to remedy these deficiencies.
Eloise O’Carroll, Programme Manager for Forestry, Natural Resources and Energy at the EU Delegation to Indonesia, welcomed the government’s initiative. She said the dashboard would be useful not only in the context of the EUDR, but also for other export markets that are increasingly demanding sustainable products.
“We are also pleased that the dashboard will provide the government with data on deforestation according to the FAO definition, but also according to the Indonesian definition and classification of forests,” O’Carroll said.
Banner image: Deforestation for oil palm plantations in Riau, Indonesia. Image by Rhett A. Butler/Mongabay.
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