EU Pressure Makes Palm Oil Traceability a Challenge
Traceability plays a crucial role in the palm oil industry to maintain access to global markets while strengthening sustainable governance. The European Union, through the EU Deforestation Regulation (EUDR), demands that palm oil can be proven to be deforestation-free and that the product’s journey can be tracked from the final product in supermarkets back to the original plantation location.
Strategic Advisor for CECT Sustainability at Trisakti University, Windrawan Inantha, stated that in the realm of global palm oil trade, the European Union has shifted from being a market or buyer of products to a determinant of the industry’s direction. According to him, the pressure from the European Union poses a major challenge to the national palm oil industry.
This is because the domestic market has almost never requested information on the origin plantation of CPO in cooking oil bottles or derivative products. “Palm oil traceability today is largely driven by pressures for market access and global governance rather than from domestic consumer demands,” he said in a press release in Jakarta on Tuesday (21/4/2026).
According to Windrawan, the main challenge in implementing traceability in the national palm oil industry is that 42 percent of Indonesia’s palm oil area is managed by smallholders. In the context of traceability, he continued, smallholder farmers become the most vulnerable point in the supply chain. There are at least five challenges in implementing traceability at the smallholder level.
These include land legality, technical capacity, weak economic incentives, certification costs and farmer organisation, as well as limitations in supporting human resources. “A system that demands precise geolocation, legal documents, administrative recording, and digital connectivity will always be easier to implement by large companies than by independent smallholders,” said Windrawan.
He hopes that the Plantation Fund Management Agency (BPDP) can emerge as a catalyst for transformation in the plantation sector while addressing the traceability challenges in the national palm oil industry. Windrawan encourages BPDP to make traceability readiness a priority condition for programme beneficiaries.