EUDR becomes gatekeeper for Indonesian palm oil in Europe, GAPKI flags smallholder data gap

Sustainability has stopped being purely an environmental issue for Indonesia's palm oil industry and has become a determinant of market access and competitiveness, GAPKI Head of Foreign Affairs M. Fadhil Hasan said at the OFI International 2026 forum in Amsterdam on 21–23 September 2026, sawitsetara.co reported. GAPKI Chairman Eddy Martono also attended the global oils and fats gathering, held at the Amsterdam Congress Centre.

Fadhil's presentation, “EUDR and IE-CEPA: Challenges and Opportunities for Indonesia's Palm Oil Industry”, set out how the sector is positioned against the European Union Deforestation Regulation and the state of Indonesia–EU economic cooperation. His central argument was that the harder task is not compliance itself, but producing evidence of compliance that international markets accept.

Scale raises the stakes

Citing USDA FAS data from July 2026, Fadhil said palm accounts for about 34.2% of global vegetable oil production in 2025/26, ahead of soybean at 30.3%, rapeseed at 15.2% and sunflower at 8.9%. He added that one hectare of oil palm yields several times more oil than competing oilseed crops. That scale places palm at the intersection of rural incomes, food and energy security, international trade and environmental policy, which is why sustainability carries at least four interlocking dimensions: environmental, social, economic and governance.

The EUDR requires commodities entering the European market to be demonstrably deforestation-free, legally produced and traceable to their point of origin. Pressure is not confined to Europe. Investors, buyers and financial institutions increasingly demand their own evidence of sustainability practices along the supply chain.

Smallholders are the weak link

Independent smallholders are the group most exposed to the shift, according to Fadhil. They contribute substantially to world palm oil output but lag far behind on certification and documentation readiness. The constraint is not production capacity but the ability to supply the data the market now requires: land legality, geospatial coordinates, plantation registration, mill access and labour documentation. If that gap is not closed, growers who have been an integral part of the supply chain risk being left behind as requirements tighten.

Where the national system falls short

Indonesia has foundations to build on, Fadhil said. Legal compliance is already embedded in the Indonesian Sustainable Palm Oil (ISPO) system, and geospatial data exists through licensing and plantation registration instruments. The 2025 ISPO reform, delivered through several government regulations, widened certification from upstream to downstream operations including bioenergy, strengthened institutional arrangements and opened the way to group certification and financing support for farmers.

Gaps remain. Indonesia's definition of deforestation and its cut-off date are not fully aligned with the rules the European Union applies. Data systems including SIPERIBUN, e-STD-B, legality records and traded-product data still need to be linked into a complete chain of custody from plantation to market. Legality, labour and free, prior and informed consent documentation at smallholder level needs strengthening, and the national system's capacity to generate, store and exchange coordinate data at the precision the EUDR requires is another open question. The task is not simply to hold data, but to make it integrated, accurate, verifiable and recognised by international buyers.

Proposals and the 2027 balance

Fadhil framed Indonesia–EU economic cooperation as a space for joint solutions that can reinforce market access, transparency and traceability as well as technical and institutional cooperation. He proposed integrating land and legality data into a more connected national data architecture, aligning definitions and cut-off rules, developing an ISPO–EUDR risk assessment tool, establishing a national technical helpdesk and expanding group-based mapping and certification for farmers, backed by financing to carry growers through the transition. Success, he said, rests on three foundations: stronger ISPO traceability and verification, technical, digital and financial support for smallholders, and consistent Indonesia–EU policy dialogue. He set out five steps for the industry:

• Improve the quality of implementation
• Accelerate digital transformation
• Strengthen smallholder capacity
• Harmonise national policy
• Strengthen sustainability diplomacy

ISPO does not have to be identical to every international standard, Fadhil argued; what matters is that the evidence it produces can serve different due diligence requirements without duplicating processes. Compliance with national rules does not automatically mean that buyers, investors and regulators in destination markets can use that evidence. As one of the world's leading suppliers, he said, Indonesia should move from rule-taker to rule-shaper in the design of global sustainability standards, which requires data strength, credible certification, robust traceability and diplomatic capacity.

On supply, Fadhil put 2026 output as relatively stable with exports likely to slip slightly. For 2027, a strong El Niño is projected to cut production by around 4–5 million tonnes, while domestic consumption rises by about 2 million tonnes as the B50 biodiesel programme reaches full implementation — a combination that points to further pressure on exportable volumes.