Harvesting the Low-hanging Fruit: Implications of the EUDR on the Global Palm Oil Supply Chain

In May 2023, the European Council adopted the EU Deforestation-free Regulation (EUDR). Large and medium-sized companies that place palm oil and palm oil derivatives in the EU-27 (a major palm oil and palm oil derivatives importer) have an 18-month grace period to comply with the law, which went into force in June

Initially, the global palm oil supply chain will face challenges, as investment throughout the supply chain is needed to comply with EUDR requirements. Involving smallholder producers is key for the food system transition, and all stakeholders in the palm oil supply chain (governments, millers, processors, traders, etc.) will need to collaborate in order to facilitate smallholders’ compliance with EUDR requirements and to avoid excluding them from the EU-27 market. At the same time, smallholders’ supply chains could be shortened, which would increase transparency in the global palm oil supply chain and value chain.

Although the EUDR states that palm oil exporters cannot use existing sustainable palm oil certification, such as Roundtable on Sustainable Palm Oil (RSPO), as a “green lane” to comply with EUDR requirements, in the short term, the existing RSPO identity-preserved and segregated supply chain models provide a “low-hanging fruit” solution to compliance with EUDR requirements within the 18-month grace period. Ultimately, the law’s implementation presents a real opportunity to increase the global production volumes and trade of sustainable palm oil.