At some point over the next few days, the European Parliament is due to vote on a new piece of legislation called the European Union Due Diligence Proposal. This new law is intended to help reduce Europe’s contribution to deforestation. In reality, it is likely to have serious unintended consequences globally for smallholder farms, potentially forcing them out of business and into poverty.
The proposed new law is the Commission’s way of promoting deforestation-free products. It believes this represents an essential step forward in global environmental governance. But despite its positive intentions, there are several challenges with the current proposal which will either limit its capacity to solve the deforestation problem or even create seriously damaging unintended consequences for vulnerable communities globally, not least the smallholder farms who rely on crops like palm oil for their livelihoods.
Palm oil is the most widely used vegetable oil in the world. It is used in everyday products from infant milk formula to toothpaste, and from washing detergent to ice cream. The EU imported eight million metric tons of palm oil (and other palm oil products) from non-EU countries in 2021. In the category of palm oil-related products, palm oil itself represents the largest share of imported volumes and values in the EU27, accounting for 74 per cent of the total imported volumes and 83 per cent of the total imported value, which is equivalent to roughly five billion euros.
Palm oil producers will suffer under the EU’s new law, which is part of a sustained anti-palm oil campaign. That’s despite the fact that palm oil is essential to our daily lives. Crucially, it is also the most efficient vegetable oil crop on the market. It meets forty per cent of the global demand for vegetable oil, yet it occupies only six per cent of the land used to produce vegetable oils. Other vegetable oil crops such as sunflower and olive need between four and ten times more land to produce the same amount of oil.
That means that simply switching over to other vegetable oils – which the EU’s anti-palm oil stance seems to encourage – will only exacerbate deforestation and natural habitat loss. Yet around ninety per cent of the palm oil imported into Europe is ‘Certified Sustainable Palm Oil’ (CSPO) anyway, which means there is no lasting damage or impact to primary forest, natural habitats or local communities and cultures.
Besides its importance for Europe, the Roundtable for Sustainable Palm Oil estimates that oil palm farming provides an income for more than seven million smallholder farmers around the world. These farmers form a crucial part of the socio-economic development of their communities. For example, in Malaysia, palm oil has been a key contributor to reducing poverty from fifty per cent in the 1960s down to just five per cent today, with smallholder farmer production accounting for forty per cent of the total palm oil plantation areas.
But the current European Union proposal poses significant risks to these communities. If the legislation pushes European companies to consider smallholder farmers, such as those in Malaysia, too risky to have in their supply chain because they may not meet the anti-deforestation criteria in the very short timeline, it could result in cutting out smallholder fares, meaning those farmers lose access to the European market. That would have direct social and economic impacts on communities which are reliant on export-related incomes to meet their basic needs. It is therefore vital to take steps to ensure the regulation does not inflict social, and environmental, harm.
