Anti-Deforestation Law Is EU’s Measure to Regulate Palm Oil Price, Expert Says

Researcher from the Institute for Economic and Social Research of Universitas Indonesia Eugenia Mardanugraha said that the EU’s Anti Deforestation Law (EUDR) is Europe’s line of action to control the prices of palm oil.

According to Eugenia, the regulation to prevent agricultural import in relation to illegal deforestation is no more than the EU’s ploy to hinder Indonesia’s industrial development, including its palm oil industry.

“With the regulation (EUDR), EU tries to control the international palm oil price,” said Eugenia when met at West Bandung, on August 23, 2023.

She explained that the financial market dominance affects the prospects and future of the Indonesian palm oil industry. Therefore, it’s unsurprising for the EU to release EUDR. According to Eugenia, Indonesia has to control the financial market, since developing the palm oil industry could not depend on supply control alone.

Eugenia said that Europe, especially the Netherlands, will lose its hold to control prices if Indonesia’s financial market or palm oil market continues to grow. Thus, she urges Indonesia to develop a mature palm oil financial market to rise above the Netherlands and Malaysia.

“One thing for sure, the [EUDR] implementation causes a decrease in palm oil demand,” said Eugenia.

The decrease in demand could cause a decrease in palm oil prices and an increase in vegetable oil prices. The export and potential profit from the palm oil industry could also be disrupted. In addition, Indonesia also has to adapt the supplies and production if the EU demand lowers.

Tags: Indonesia, EU, prices, Malaysia, palm oil, deforestation, The Netherlands, EUDR, Anti Deforestation Law