Study finds RSPO-certified independent smallholders well positioned for EUDR

Commissioned by RSPO and published in August 2024, the Proforest study titled, “Overview of Impact of the EUDR on RSPO Independent Smallholders” aimed to conduct a comprehensive gap analysis identifying areas of alignment and divergence between the EUDR requirements and the RSPO Independent Smallholder Standard as well as associated Group Certification requirements.

The study was divided into two parts:

• a Gap Analysis that specifically examined the RSPO ISH Standard Certification compared to EUDR requirements, and whether current RSPO systems will allow the integration of certified smallholder volumes within the EU;
• and an Impact Study exploring the challenges faced by certified, or yet-to-be-certified, independent smallholders in complying with the EUDR, highlighting insights and lessons learned from supply chain actors within the RSPO membership.

Proforest’s research findings serve as a key resource following the official adoption of the 2024 Independent Smallholder Standard (ISH), which has been enhanced to strengthen smallholder inclusion in physical supply chains as well as enable better access to certification and new markets.

Additionally, with the one-year postponement of the EUDR application date, the study could be a springboard to further support palm oil smallholders in meeting due diligence obligations.

The study revealed the following:

• By complying with the RSPO ISH Standard, fully certified smallholders who have reached Milestone B are already in a good position to provide evidence for some key elements of the traceability, no deforestation, and legality requirements of the EUDR. Therefore, providing this evidence to their buyers might help feed into their due diligence requirements.
• As such, certified independent smallholders are in a stronger position to be able to provide credible evidence of compliance with the traceability, no-deforestation, and legality aspects of the EUDR compared to non-certified independent smallholders who may not have access to such a framework or tools necessary for them to remain included in EU supply chains.
• Another important finding highlights the implications at the supply chain level, specifically addressing the challenges of an interrupted supply chain. Analysis revealed challenges among key supply chain actors in ensuring that the EUDR-compliant status of certified smallholders is effectively transferred throughout the supply chain, reaching operators responsible for placing palm oil in the EU market and fulfilling due diligence processes further downstream. This is a critical factor ensuring that smallholders remain within EU supply chains.

ISEAL Innovations Fund Grant

In response to the findings of the Proforest study, RSPO has been working to explore alternatives to address the challenge of interrupted supply chains.

Recently, RSPO, alongside Proforest, secured an ISEAL Innovations Fund grant under the name “EUDR and Independent Palm Oil Smallholder Inclusion – Bridging the gaps in interrupted supply chains”, designed to address the supply chain and traceability gaps linked to ISH volumes.

Ensuring smallholders’ inclusion is critical to transforming the palm oil industry into a more sustainable one, especially considering that smallholders account for 40- 50 percent of global palm oil production. In this regard, RSPO is fully committed to developing mechanisms and incentives that promote more integrated supply chains, ensuring that smallholders are not left behind, said Francisco Naranjo, RSPO Technical and Smallholder Director.

Through the ISEAL grant, a multipronged approach will be carried out in order to tackle different areas of the supply chain, to ensure continued and potentially increased, sourcing of Fresh Fruit Bunches (FFB) from certified sustainable independent smallholders, as well as the enhancement of internal RSPO tools and systems.

Moreover, this aims to enhance RSPO’s understanding of interrupted supply chains by exploring such interruptions coming from initial production to first buyers including intermediaries such as dealers or middlemen, to mills and downstream buyers.