EU's decision to lower usage of palm oil is not welcomed by Indonesia and Malaysia
- 2 months ago
Malaysia and Indonesia surely will not like the latest statements form the EU as it plans to bring to an end the use of palm oil in transport fuel as it has come under heavy criticism linking the use of the oil to severe deforestation and labour abuse.
So far France and Norway have begun restricting the use of the oil and the EU had already agreed in June on palm oil levels to be maintained at 2019 levels until 2023 and to reach zero by 2030.
Regardless of the fact the bloc is the world's largest user of the oil product, it has taken this measure due to its plans to incorporate renewable energy in the broader scale.
As expected, both Indonesia and Malaysia, whom contribute 80% of the oil production, condemned the decision, Malaysian Primary Industries Minister, Teresa Kok stated, "This is a most unwelcome decision and goes against the very principles of free and fair trade. The vote by the (French) parliamentarians is alarming and deserves the strongest condemnation."
While Indonesia’s Trade Minister Enggartiasto Lukita stated in late Novemeber that,"Should Europe continue to disrupt our palm oil exports, we can halt imports of milk powder.”
Nevertheless, both countries must do a better job to control the deforestation which has been a major issue, the Indonesian island of Sumatra has lost 25 million hectares in the last 31 years and Malaysia has been accused of carelessly destroying ecosystems and driving out indigenous tribes whom lives depend on the forests.
With that, other food and drink companies are beginning to tighten regulations on the producers, Nestle is aiming to deliver 100% sustainable palm oil by 2020 and has already ended several partnerships due to questionable conducts on sourcing the product.
In a recent report by Fitch Solutions it pointed out the current status of the industry, "One of the most significant risks to the palm oil sector resides in its poor sustainability records and negative reputation in developed markets, which pose threats to future demand."
"Although some large plantation companies are making efforts to improve their sustainability records ... we note that the reputation of the global palm oil industry has not improved."
Source: Smart Trend Team