EU sustainability curbs risk diverting palm oil exports: Expert
New Straits Times (22/12/2025) - KUALA LUMPUR: Growing pressure from global sustainability requirements, including new regulations introduced by the European Union (EU), may prompt some palm oil producers to divert exports to markets with more lenient standards.
French Agricultural Research Centre for International Development (CIRAD) Southeast Asia regional director Professor Alain Rival said this trend could undermine ongoing efforts to strengthen certification compliance.
"The rising cost and complexity of compliance could also force smallholders out of sustainable certification systems," he said at the Malaysian Palm Oil Board (MPOB) International Palm Oil Congress and Exhibition (PIPOC 2025) recently.
Rival, who participated in the early discussions leading to the formation of the Roundtable on Sustainable Palm Oil (RSPO), cautioned that overly stringent rules and escalating compliance costs may push producers towards countries that continue to accept palm oil without complex conditions.
"If regulations are too strict and the cost is too high, the industry will shift to other markets such as China or India, which still accept palm oil without complicated requirements," he said.
He noted that RSPO certification costs ranging from 50 to 70 euros (RM238 to RM334) per hectare pose a heavy burden on smallholders operating with very slim profit margins.
While certification delivers clear environmental benefits and improves field efficiency, Rival said authorities must ensure the requirements remain within the financial capacity of smaller producers.
"As audit costs, geolocation tracking, and documentation requirements increase, some will inevitably exit the certification scheme," he said.
Rival warned of the emerging risk of a dual global trading system, certified palm oil for premium markets and uncertified palm oil for countries that do not impose strict sustainability conditions.
"This situation weakens our collective efforts to build a more sustainable industry. As long as there is room for a more lenient market, producers will naturally be drawn to it," he said.
Rival also highlighted the persistent issue of counterfeit seeds, with impacts only detected four to five years later when trees reach maturity, a major setback for smallholders.
He outlined two major long-term challenges expected to shape the industry over the next decade which include climate change and labour shortages.
Extreme weather events and El Nino can significantly reduce yields, while labour crises across producing countries call for shifts in wage structures and employment conditions.
"If the sector wants to remain attractive, wages must become more competitive. The industry can no longer rely on a low-cost labour model," he added.