MILLIONS OF SMALLHOLDER PALM OIL FARMS IN INDONESIA LACK EUDR CERTIFICATION To give an idea of the magnitude of some of the situation, in Indonesia, about 41% of their palm oil plantations, so that is about 6.7 million hectares, are managed by independent smallholders and research has found only about 1% are certified for traceability and legality for EUDR (2)
…but there is more.
In discussions I’ve had with some industry sources, one of the major issues that keeps cropping up, is the geo-mapping and how it can be carried out and monitored. I was given the following example. On a smaller scale, you may have a smallholder with a 2 hectare farm growing coffee, who is non EUDR registered and he has a chat with another neighbour of a 2 hectare farm growing the same product who is EUDR registered, quietly suggesting that they mix some of his non EUDR product in with the EUDR product…and then split the difference! This, you can argue, is possible but you would imagine it would be on a small scale.
EUDR ARBITRAGE Well…let’s look at another situation. The EU has designated 4 countries as ‘high risk’ under EUDR. They are Belarus, Myanmar, North Korea & Russia with a about 50 countries as ‘standard risk’ including Brazil, Indonesia & Malaysia and 140 as ‘low risk’ including all the EU, UK, US, Canada, Japan, Australia, South Africa and interestingly China (3)
Palm Oil Plantations in Indonesia (in million hectares)
Certified Smallholder Area 0.4%
Uncertified Smallholder Area
40.6% Other Plantation Area 59%
it has been suggested that we may see smuggling as a form of EUDR arbitrage where, for example, lumber cut in Russia could be transhipped through China as the levels of due diligence needed under EUDR for China are simplified including origin, risk assessment and mitigation measures. This situation may also apply to other ‘high risk’ countries in other products and begs the question of how will the EU deal with such situations.
Before we even get to that stage, it is worth noting that last time, back at the end of 2024, the move to postpone EUDR was barely pushed through as there was at the time, a strong move to reopen the whole debate on what is EUDR and its coverage. Back then, many left-of-centre and environmentalist Members of the European Parliament (MEPs) wished to make a more stringent EUDR and were, if I recall correctly, just barely held off by more centrist colleagues. This time, that desire will still be there…but we have an additional force that may tip the balance in an odd alliance. Many right-of-centre and pro-business MEPs are also against EUDR because of the polar opposite belief that the regulation goes too far.
. The reason I see China is interesting, is that
These forces could seemingly come together to possibly derail EUDR completely, a situation that would not help many of the big companies out there as overall, many have prepared for EUDR in a timely manner and wish it happen after all the preparations they have undertaken. The singular feature I’ve seen from the new right-of-centre opponents is to have a 3rd category for EUDR of ‘no risk’ or ‘negligible risk’.
Source:
AgTechNavigator.com (11th August 2025) 28 | ADMISI - The Ghost In The Machine | Q3 Edition 2025
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