8 March 2024

2 minute read

By: Global Ag Media

Palm oil producer Golden Agri Resources (GAR) intends to maintain its exports to the European Union at around 800,000 metric tons next year even after the EU's landmark new deforestation regulation takes effect, Reuters reported, citing a company official.

The European Parliament approved a law last April that will ban imports of seven commodities including palm oil, soyoil, and beef if they are linked to destruction of the world's forests.

"We want to continue trading in the EU. It is not the biggest of our export markets but it is an important one - obviously, a premium-paying one. We want to stay in that space," Anita Neville, the firm's chief sustainability and communications officer, said in an interview in Kuala Lumpur this week.

Singapore-based Golden Agri exports 700,000-800,000 tons of crude palm oil and laurics to the EU annually, which represents 10% to 15% of its revenue, she said.

The company believes that it's own-sourced palm oil is compliant with the EU Deforestation Regulation (EUDR), and has traceability tools in place, Neville said.

It is arranging its supply chain, including rerouting trucks and preparing separate vessels to segregate EUDR complaint products from those without proof of land legality, geolocation, and that they are deforestation-free.

"GAR has been working on preparing for EUDR for two years and we feel reasonably confident that we are well placed to comply to EUDR,” she said.

While Golden Agri will prioritise its own products when EUDR takes effect on Dec 30 this year to ensure compliance and avoid financial penalties, in the long term it needs its smallholder suppliers to help meet demand, especially for palm kernel oil.

"To achieve perfect compliance from day 1, you will see some people excluding smallholders because of the level of risk," Neville said.

But, she added, "this rule is not going away."

"So we also need to be thinking how we build our system and opportunity to bring more smallholders in day 21, 51, and so on," Neville said, adding that the company is working on lists of compliant third parties.

The world's two biggest palm oil producing countries, Indonesia and Malaysia, have voiced concerns that the deforestation law could be detrimental to small farming businesses.