- The Indonesian government and its European Union counterparts are ironing out differences in their forest and commodity supply chain data ahead of a looming deadline that could shut Indonesian commodities out of the EU market.
- Under the EU’s Deforestation Regulation, commodities associated with deforestation will be barred as of next year from entering the EU market; Indonesia is a major producer of four of the seven listed commodities: palm oil, coffee, cocoa and rubber.
- To be allowed to export these commodities to the EU, producers and traders must be able to show that they weren’t sourced from land that was deforested to grow them, but the forest maps used by Indonesia and the EU have several differences that need to be reconciled.
- The EU ambassador to Indonesia says his side is working with local authorities to resolve the matter, which he attributes to the differing definition of “forest” as used by the European and Indonesian authorities.
JAKARTA — The Indonesian government is working on improving and synchronizing its forest and supply chain data to comply with increasingly strict sustainability standards and requirements in markets where it exports to, including the European Union.
Earlier this year, the Indonesian government discovered discrepancies between the forest map and data that it uses, and those used by the EU as a reference for the implementation of the European Union Deforestation Regulation (EUDR).
The EUDR bans imports of seven forest-related commodities — soy, palm oil, coffee, cocoa, timber, rubber and beef — associated with deforestation and illegality. It requires producers and companies trading these commodities into the EU to provide detailed evidence proving they weren’t produced from land deforested since 2020. The new regulations give producers and companies until Dec. 30, 2024, to fully comply.
To implement the EUDR, the EU is using forest data published on its Forest Observatory platform, which monitors changes in the world’s forest cover and related divers.
Meanwhile, the Indonesian government has its own forest monitoring system called SIMONTANA. It also has its own definition and classification of forest and deforestation.
When comparing the EU Forest Observatory maps and the maps in SIMONTANA, the government found discrepancies, with the EU overestimating Indonesia’s forest cover. The government found that some shrublands and farmland, like oil palm plantations and coffee estates, had been categorized as forest cover by the EU.
These discrepancies could make it difficult for Indonesian producers to comply with the EUDR and to export their products to the European market, said WWF Indonesia CEO Aditya Bayunanda.
“Getting the right map together could help us to comply [with the EUDR]. Otherwise there could be debate [on whose data are correct] during every shipment,” he told Mongabay in Jakarta in June.
These data discrepancies could also result in the EU wrongly categorizing Indonesia as a high-risk country, Indonesian Environment and Forestry Minister Siti Nurbaya Bakar said as quoted by state-owned media.
The EUDR adopts a classification system that will categorize exporting countries based on their deforestation risk. Low-risk countries will have a simpler due diligence procedure, while higher-risk countries will have to go through more rigorous checks. The checks will make use of geolocation coordinates, satellite monitoring tools and DNA analysis that can trace the origin of product entering the EU.
There are concerns that a high-risk label for Indonesia — the world’s biggest palm oil producer and also a major exporter of timber, coffee, cocoa and rubber — will make it more difficult for producers in the country to export their goods to the EU.
To iron out these differences, the Indonesian government is working with EU authorities, said Denis Chaibi, the EU ambassador to Indonesia.
“Yes, the government approached the EU, indicating that the maps that were prepared by our joint research center contains a mistake according to the Indonesian authorities,” he told reporters in Jakarta in June. “So yesterday we had a meeting to compare notes and maps, and I think there’d be a follow-up so that we can continue our work to make sure that our data are close to each other.”
Chaibi said the data discrepancies stem from the differences in forest definition adopted by the EU and the Indonesian government.
The EU uses the Food and Agriculture Organization’s definition of forest, which Chaibi said is the one that most people use. Meanwhile, the Indonesian government has its own definition.
“So we have to narrow down the differences between our understanding of what constitutes a forest,” Chaibi said.
The looming deadline to comply by the end of the year means both sides have less than six months to iron out their differences, he added.
“[W]e are working hard to make sure we can move the data January 1, which is the start of the implementation of the new regulation,” Chaibi said.
Traceability dashboard
Another effort that the Indonesian government is undertaking to make it easier for its producers to prove that their products are deforestation-free is developing a supply chain traceability system.
The system will be in the form of an online dashboard, set for launch in September, which will collect and synchronize all data and maps related to various commodities, such as palm oil, coffee, cocoa and rubber, at all stages of the supply chain.
The EUDR has received backlash from producer countries like Indonesia, which accused the bloc of unfairly treatment of their products in the European market. One of the more contentious aspects of the EUDR is the requirement for producers and traders to provide precise geographical coordinates for all plots of land from which their products are sourced.
The idea is so that buyers in the EU can trace commodities back to the farm where it was grown to make sure they aren’t produced by clearing forests first.
However, achieving full traceability for commodities like palm oil in Indonesia has proven challenging due to various factors, including bureaucratic hurdles, overlapping land claims, and lack of documentation for palm oil transactions.
For one, Indonesia doesn’t have a mandatory traceability system for palm oil producers. It does have a mandatory sustainable palm oil standard, ISPO, but this doesn’t impose any traceability requirements, even though there’s a plan to include it in the next iteration of the standard.
The industry, however, has largely taken it upon itself to have a traceability system. But this often only traces the commodity back to the processing mill where palm kernels are pressed, not the plantation where the kernels were cultivated. This gap is likely due to the lack of publicly available data on plantations, which the government largely conceals on the grounds of data privacy.
Lack of traceability to the plantation level is especially true for farms managed by independent smallholders, who produce up to 40% of Indonesia’s palm oil but who often don’t document their transactions and sell their palm fruit to an informal network of intermediaries and middlemen. This makes it particularly challenging to trace their supply, WWF’s Aditya said.
There’s also the issue of overlapping land ownership data, with different government agencies possessing different data on the size of oil palm plantations.
The new dashboard aims to address these shortcomings.
Eloise O’Carroll, program manager for forestry, natural resources and energy at the EU delegation to Indonesia, welcomed the government initiative. She said the dashboard will be helpful not just in the context of the EUDR, but also for other export markets that increasingly demand sustainable products.
“[We’re] also pleased to know that under the dashboard, the government will have data on deforestation using the FAO’s definition, but also using the Indonesia’s definition and classification of forests,” O’Carroll said.
Banner image: Deforestation for oil palm plantation in Riau, Indonesia. Image by Rhett A. Butler/Mongabay.
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