KUALA LUMPUR (June 27): The Malaysian Palm Oil Council (MPOC) flagged the lack of clear guidance and clarity from the European Union (EU) on its upcoming deforestation regulation with just six months left until the compliance deadline.

Malaysian exporters have invested “significantly” in financial and technical resources to meet the European Union Deforestation Regulation (EUDR), focusing on geolocation, legal information, and supply chain traceability, MPOC chief executive officer Belvinder Kaur Sron said in a statement on Thursday.

“However, many small farmers within the palm oil supply chain are encountering difficulties and are at risk of being excluded,” Belvinder said. “Despite these efforts, the complexity of the palm oil supply chain continues to make the provision of necessary due diligence information a challenge.”

Under EUDR, importers must ensure that products entering the bloc are deforestation-free and produced according to relevant local laws. The EUDR, designed to mitigate the environmental impact of imported commodities, has set a compliance deadline of Dec 30, 2024.

Indonesia and Malaysia, which together produce over 80% of the edible oil used in everything from lipstick to diesel, have long complained that the measures are discriminatory.

“The sheer volume of information involved, which was further compounded by the complexities of the palm oil supply chain,” also complicate efforts to comply with the EUDR requirements, the council noted.

MPOC also stressed the need to address EUDR challenges collectively in a webinar attended by close to 500 participants.

At the webinar, Kuala Lumpur Kepong Bhd (KL:KLK) chief sustainability officer Ku Kok Peng highlighted the potential risk of smallholder exclusion, the limitation of compliant supply to the EU, and the consequent higher costs.

He also raised the urgency for the EU to resolve the uncertainties faced by exporters that need to prepare for EUDR-compliant shipments to the EU by September or October this year.

“The current situation may deter businesses from investing in the EU, potentially affecting employment and the economy negatively,” he added.